CVM Resolution 12 on the Preparation and Disclosure of Investment Club Financial Statements

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL (CVM) 7 de Setembro Street, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – ZIP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Cincinato Braga Street, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/SP – ZIP: 01333-010 – Brazil - Tel.: (11) 2146-2000

Provides for the preparation and disclosure of the Financial Statements of Investment Clubs.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION OF BRAZIL – CVM makes public that the Collegiate Board, in a meeting held on November 17, 2020, based on the provisions of Articles 2, item V, and 8, item I, of Law No. 6,385, of December 7, 1976, APPROVED the following Resolution:

CHAPTER I – SCOPE AND PURPOSE
Art. 1. This Resolution provides for the norms applicable to the preparation and disclosure of financial statements and to the accounting criteria for recognition, classification, and measurement of assets and liabilities, as well as for the recognition of revenues and allocation of expenses of Investment Clubs.

CHAPTER II – ACCOUNTING CRITERIA
Art. 2. Clubs must apply the accounting practices for recognition, classification, and measurement of assets and liabilities, as well as for recognition of revenues and allocation of expenses, set forth in Annex A of this Resolution.

Art. 3. The entity administering the organized market may determine the observance of additional accounting procedures, provided they are set forth in the Chart of Accounts for Investment Funds – COFI.

CHAPTER III – FINANCIAL STATEMENTS AND DISCLOSURE OF INFORMATION
Art. 4. The financial statements of Clubs are composed of the following documents:
I - statement of financial position (Annex B); II - statement of income for the period (Annex C); and III - statement of changes in equity (Annex D).

§ 1. The financial statements of Investment Clubs must be prepared on the date established in the special norm governing their operation.

§ 2. The financial statements of Investment Clubs are comparative with the previous social year.

§ 3. The explanatory notes are an integral part of the financial statements and must include, at a minimum, the following information:
I – operational context;
II – presentation of the financial statements and the main practices used in their preparation; III – information on the portfolio, including the discrimination, by type and value, of all financial assets that make up the Club's portfolio, separated by category; IV – illiquid assets in the market, disclosing the methodology adopted for determining the fair value of assets without market liquidity; V – regarding financial derivative instruments, inform:
a) utilization policy; b) risks associated with each market operation strategy; c) valuation criteria, methods, and significant assumptions applied in determining fair value; and d) values grouped by underlying asset and maturity bands, highlighting reference values, cost, and fair value; VI – issuances, redemptions, and other movements occurring in equity during the period; VII – value allocated as administrative and performance fees during the period, disclosing:
a) the criteria adopted for calculation and payment, including, when applicable, third-party services on behalf of the administrator; and b) the current administrative and performance fee percentages and any changes that occurred during the period; VIII – changes in the bylaws that occurred during the period and the previous social year used for comparison; IX – regarding the liquidation of the club, analysis as to whether redemptions were carried out under equitable conditions and in accordance with relevant regulation, as well as regarding the existence or non-existence of unrecorded debts, credits, assets, or liabilities; X – identification of the accountant and the director responsible for the club; and XI – subsequent events.

Art. 5. The entity administering the organized market may require other information that it deems necessary in the explanatory notes, at its discretion.

Art. 6. The norms on the disclosure of financial statements must be established by the entity administering the organized market.

Art. 7. The audit of the financial statements of Clubs, when applicable, must observe the criteria and procedures applicable to investment funds.

CHAPTER IV – FINAL PROVISIONS
Art. 8. Any specific formal consultations regarding the interpretation of accounting norms and procedures provided for in this Resolution must be directed to the entity administering the organized market and must be signed by the administrator and the qualified professional responsible for the accounting.

Sole Paragraph. Consultations concerning the change or adoption of new accounting practices must be accompanied by the opinion of the independent auditor, when applicable.

Art. 9. CVM Instruction No. 495, of April 20, 2011, is hereby revoked, on the date this Resolution enters into force.

Art. 10. This Resolution enters into force on December 1, 2020.

Signed electronically by
MARCELO BARBOSA
President

ANNEX “A” TO CVM RESOLUTION NO. 12, OF NOVEMBER 18, 2020
Accounting Valuation and Allocation Criteria

1. General Provisions
   1.1 – The assets comprising the portfolios of Clubs must be recorded at the value effectively contracted or paid, and adjusted daily to market value, recognizing accounting appreciation or depreciation in counterpart to the appropriate revenue or expense account, in the period's result.
   1.2 – Market price is considered the value that can be obtained with the negotiation of the security or financial instrument in an active market, where buyer and seller are independent, without corresponding to a compulsory transaction or resulting from a liquidation process. In turn, market is defined as that in which the asset is traded in a habitual and frequent manner, and among the eventual available markets, the one with the highest volume of transactions of the asset must be selected.
   1.3 – In the absence of a trading market for a given asset, its accounting must be made using one of the following criteria:
   a) by the value that can be obtained with the negotiation of another asset of at least similar nature, term, risk, and indexers; b) by the present value of future cash flows to be obtained, adjusted based on the prevailing interest rate in the market, on the date of the financial statement; or c) by the net realizable value obtained by a mathematical-statistical pricing technique or model.
   1.4 – Atypical quotes must be excluded when evaluating the economic value of the asset. The documents that constitute the atypicality of the excluded quote and the documents, criteria, and methods used for the economic evaluation of the asset must be preserved by the administrator according to the criteria established by the entity administering the organized market.
   1.5 – If impropriety or inconsistency is found in the classification and evaluation processes, the entity administering the organized market may determine the reclassification and re-evaluation of the Club's assets, with the consequent recognition of effects in the financial statements, without prejudice to any applicable sanctions.
   1.6 – The adoption of the procedures referred to in this Resolution must produce immediate effects on the value of the Club's share, observing the other conditions provided for in its bylaws.
   1.7 – Adjustments resulting from the application of the procedures referred to in the previous item must be recorded in counterpart to the appropriate revenue or expense account in the period's result.

2. Fixed Income Assets
   2.1 – Fixed income assets comprising the portfolios of Clubs must be recorded at the value effectively paid, including brokerage fees and emoluments, and classified into the following categories:
   a) assets for trading; and b) held-to-maturity assets.
   2.2 – The category of assets for trading must include securities and financial instruments acquired with the intention of being actively and frequently traded.
   2.3 – The category of held-to-maturity assets must include securities and financial instruments when, on the acquisition date, there is an intention of the quota holders to preserve an application volume compatible with the maintenance of such assets in the Club's portfolio until maturity, provided that the following conditions are cumulatively observed:
   a) there is a formal request to all quota holders, which must contain a declaration that they have the financial capacity to hold to maturity the assets classified in this category; and b) all quota holders who join the Club from the classification in this category formally declare, through the adherence term to its regulations, their financial capacity and consent to the classification of securities and financial instruments comprising the Club's portfolio in the category mentioned in this item.
   2.4 – Securities and financial instruments classified in the category of assets for trading must be adjusted daily to market value, computing appreciation or depreciation in counterpart to the appropriate revenue or expense account, in the period's result.
   2.5 – The methodology for determining market value is the responsibility of the administrator and must be established based on consistent and verifiable criteria, which take into account independence in data collection regarding the rates practiced in its trading desks, and the average negotiation price on the determination date may be used as a parameter.
   2.6 – When market price is not available for a given asset, the Club's administrator must use the techniques provided for in item 1.3.
   2.7 – The administrator, in any case, must adjust the evaluation of the assets comprising the Club's portfolio whenever there is an indication of probable losses in the realization of their value.
   2.8 – Securities and financial instruments classified in the category of held-to-maturity assets must be evaluated daily at their respective acquisition costs, plus the earnings accrued, computing appreciation or depreciation in counterpart to the appropriate revenue or expense account in the period's result.
   2.9 – The allocation of earnings must be made considering the business days between the date of the contract and the maturity date of the operation, excluding the date of the operation and including the maturity date.
   2.10 – Permanent losses with securities and financial instruments classified in the category of held-to-maturity assets must be recognized immediately in the period's result, observing that the value adjusted as a result of the recognition of such losses becomes the new cost basis.
   2.11 – The reversal of the losses mentioned in the previous item is admitted, provided it is for a justified reason subsequent to that which led to its recognition, limited to the acquisition cost, plus the earnings accrued.

3. Variable Income Assets
   3.1 – Variable income assets comprising the Club's portfolio must be recorded at the value effectively paid, including brokerage fees and emoluments, and adjusted daily to market value.
   3.2 – Acquisition cost is understood as the purchase price of the security in the current exercise or the evaluation value of the last financial position statement of the Club.
   3.3 – The evaluation of variable income assets must be made using the last daily closing quote of the market in which the asset presents greater liquidity, provided it has been traded at least once in the last 90 (ninety) days.
   3.4 - In the case of assets without trading in the last 90 (ninety) days, the value of the asset must be evaluated at the lowest among the following values:
   a) acquisition cost; b) last available quote; c) last net asset value of the asset disclosed to CVM; or d) probable net realizable value obtained by adopting a pricing technique or model.
   3.5 – The administrator, in any case, must adjust the evaluation of the assets comprising the Club's portfolio whenever there is an indication of probable losses in the realization of their value.

4. Derivatives
   4.1 – Financial derivative instruments are understood as those whose value varies, according to contractual provision, as a result of changes in interest rates, price of a security or financial instrument, commodity price, exchange rate, stock exchange index, price index, credit index or classification, or any other specific similar variable, and which are settled on a future date.
   4.2 – Operations with financial derivative instruments carried out by Clubs must be recorded observing the following procedures:
   I – on the date of the operation:
   a) in forward operations, the acquired or alienated assets must be accounted for at their spot market quotation values, with the installments to be received or paid fixed for a future date adjusted to present value, based on the rate of each contract; b) in options operations, record the value of premiums paid or received in the appropriate asset or liability account, respectively, remaining therein until the effective exercise of the option, if applicable, when it must then be written off as a reduction or increase in the cost of the good or right, by effective exercise, or as revenue or expense, in case of non-exercise, as applicable; c) in operations with other financial derivative instruments, record in asset or liability accounts according to the characteristics of the contract. II – daily: evaluate at market value.
   4.3 – The recording of the result calculated in the operations referred to in item 4.2 above must be done individually, with the compensation of revenues with expenses in distinct contracts being prohibited.
   4.4 – The reference value of operations with financial derivative instruments must be recorded in clearing accounts.
   4.5 – Assets acquired through operations with derivatives or resulting from the dismemberment of these operations must be classified, on the date of receipt of the asset object of the operation, in one of the categories provided for in this Annex.
   4.6 – In future market operations, the value of the contract must be recorded in clearing accounts, recognizing in result accounts its daily adjustments.
   4.7 – In options operations:
   I – contracts must be evaluated at market price, in consonance with the criteria used for the evaluation of the underlying asset and with its market volatility; II – exercise values, to be paid and to be received, must be accounted for in clearing accounts.
   4.8 – Securities, financial instruments, and other assets given as collateral for operations carried out in stock exchanges, futures, and organized over-the-counter markets, must be recorded in the respective equity accounts that highlight the linkage, maintaining the original evaluation criteria.

5. Loans
   5.1 – Securities and financial instruments lent must be recorded in the account RIGHTS FROM LOAN OF SECURITIES AND FINANCIAL INSTRUMENTS and evaluated at market.
   5.2 – The remuneration contracted in the operation of securities and financial instruments lent must be allocated for the term of the contract, ‘pro rata temporis’, and recorded in the account INCOME FROM RIGHTS FROM LOAN OF SECURITIES AND FINANCIAL INSTRUMENTS.
   5.3 – Securities and financial instruments borrowed must be recorded in the account CREDITORS FOR LOAN OF SECURITIES AND FINANCIAL INSTRUMENTS and evaluated at market.
   5.4 – The charge and emolument contracted in the operation of securities and financial instruments borrowed must be allocated for the term of the contract, ‘pro rata temporis’, and recorded in the account EXPENSES FOR LOAN OF SECURITIES AND FINANCIAL INSTRUMENTS.

6. Revenues and Expenses
   6.1 – The allocation of revenues and expenses of the Club is made ‘pro rata’ business day, observing, where applicable, the following criteria:
   I – Operations with Fixed Rates:
   a) active and passive operations contracted with fixed revenues and charges for a future date are accounted for at present value, with revenues and charges to be allocated registered in a subheading for internal use of the title itself or accounting subheading used to record the operation; b) the revenues and charges of these operations are allocated daily, to the credit or debit of the effective revenue or expense accounts, as applicable, due to the passage of their terms; c) the allocation of revenues and charges of these operations is made by using the exponential method, with linear allocation admitted in those contracted with a simple interest clause. II – Operations with Post-fixed or Floating Rates:
   a) active and passive operations contracted with post-fixed or floating revenues and charges are accounted for at the principal value, to the debit or credit of the accounts that record them. These same accounts accommodate the interest and monthly adjustments resulting from variations in update indices or contracted charges, in the case of floating rates; b) the revenues and charges of these operations are allocated daily to the credit or debit of the effective revenue or expense accounts, as applicable, due to the passage of their terms; c) the allocation of daily revenues and charges of these operations is made by using the exponential method, with linear allocation admitted in those contracted with a simple interest clause, according to the indexer used for correction of the next month relative to the current month, ‘pro rata temporis’ in the case of operations with post-fixed rates, or with observance of contracted rates, in the case of operations with floating charges.
   6.2 – Fixed income securities are recorded at the value effectively paid and updated daily, and, if applicable, the premium or discount must be recognized due to the passage of the maturity term of the papers.
   6.3 – Profits or losses calculated on the sale of securities are accounted for in the appropriate result accounts.
   6.4 – Dividends and interest on equity are recorded as revenue when the corresponding shares are considered ex-right in the stock exchange.
   6.5 – The expenses and charges of the Club, allocated daily and per business day, are recorded in specific accounts, except for those that, according to current norms, are borne by the administrator.
   6.6 – Brokerage fees and emoluments paid upon the sale of securities and financial instruments are recorded to the debit of the appropriate result account.
   6.7 – The administrative fee and performance fee, if any, must be calculated per business day, according to the Club's regulations and allocated daily, in accordance with current norms.
   6.8 – Payments made directly by the Club to service providers, included in the administrative fee, must have registration in specific sub-accounts of liability and result.
   6.9 – Expenses incurred on an occasional basis, the responsibility of the Club, that do not fit into other result accounts, are recorded to the debit of the OTHER ADMINISTRATIVE EXPENSES account.

ANNEX “B” TO CVM RESOLUTION NO. 12, OF NOVEMBER 18, 2020
Statement of Financial Position

Periods ended
Name of Club: CNPJ:
Administrator: CNPJ:

ASSETS
DD/MM/YYYY
A
DD/MM/YYYY
AA
In R$
% PL
In R$
% PL

Cash and Cash Equivalents
Stocks
Debentures
Other Securities Issued by Public Companies
Investment Fund Shares
Federal Public Bonds
Securities Issued by Financial Institutions
Financial Derivative Instruments
TOTAL ASSETS

LIABILITIES
DD/MM/YYYY
A
DD/MM/YYYY
AA
In R$
% PL
In R$
% PL

Financial Derivative Instruments
Administrative/Performance Fee Payable
Other Payables
TOTAL LIABILITIES
TOTAL EQUITY ATTRIBUTABLE TO QUOTA HOLDERS
TOTAL LIABILITIES AND EQUITY ATTRIBUTABLE TO QUOTA HOLDERS

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL
Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – ZIP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/ SP – ZIP: 01333-010 – Brazil - Tel.: (11) 2146-2000
ANNEX “C” TO RESOLUTION CVM NO. 12, OF NOVEMBER 18, 2020
Income Statement
For the periods ended
Name of the Club: CNPJ:
Administrator: CNPJ:
DD/MM/YYYY DD/MM/YYYY
In R$ In R$
Variable Income Securities Issued by Public Companies Other Securities Issued by Public Companies Shares of Investment Funds Federal Public Securities

Securities Issued by Financial Institutions
Derivative Financial Instruments
Club Expenses
PROFIT (LOSS) FOR THE PERIOD

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL
Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – ZIP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/ SP – ZIP: 01333-010 – Brazil - Tel.: (11) 2146-2000
ANNEX “D” TO RESOLUTION CVM NO. 12, OF NOVEMBER 18, 2020
Statement of Changes in Equity
For the periods ended
Name of the Club: CNPJ:
Administrator: CNPJ:
DD/MM/YYYY
DD/MM/YYYY
Quantity In R$ Quantity In R$
QUOTA VALUE AT THE BEGINNING OF
THE PERIOD
EQUITY AT THE BEGINNING OF
THE PERIOD
ISSUED QUOTAS
REDEEMED QUOTAS
CAPITAL CONTRIBUTIONS BY NEGATIVE EQUITY HOLDERS NET PROFIT (LOSS) FOR THE PERIOD EQUITY AT THE END OF THE PERIOD QUOTA VALUE AT THE END OF THE PERIOD