CVM Resolution No. 145 of June 15, 2022 — CVM — BR

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL - CVM 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 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4th Floor, Brasília/DF – ZIP: 70712-900 – Brazil - Tel.: (61) 3327-2030/2031 www.gov.br/cvm

CVM RESOLUTION NO. 145, OF JUNE 15, 2022
Ratifies Technical Interpretation ICPC 15 of the Accounting Pronouncements Committee - CPC, which deals with liabilities arising from participation in a specific market – waste from electrical and electronic equipment.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION OF BRAZIL - CVM makes it known that the Board, in a meeting held on May 4, 2022, based on §§ 3 and 5 of art. 177 of Law No. 6.404, of December 15, 1976, combined with items II and IV of § 1 of art. 22 of Law No. 6.385, of December 7, 1976, as well as arts. 5 and 14 of Decree No. 10.139, of November 28, 2019,

APPROVED the following Resolution:

Art. 1. The obligation for open companies to apply Technical Interpretation ICPC 15 issued by the Accounting Pronouncements Committee - CPC, which deals with liabilities arising from participation in a specific market – waste from electrical and electronic equipment, is hereby ratified, as set forth in Annex “A” to this Resolution.

Art. 2. CVM Deliberation No. 638, of August 06, 2010, is hereby revoked, from the effective date of this Resolution.

Art. 3. This Resolution enters into force on July 1, 2022.

Electronically signed by
Marcelo Barbosa
President

CVM RESOLUTION NO. 145, OF JUNE 15, 2022
2

ANNEX “A”
ACCOUNTING PRONOUNCEMENTS COMMITTEE
TECHNICAL INTERPRETATION ICPC 15
LIABILITY ARISING FROM PARTICIPATION IN A SPECIFIC MARKET – WASTE FROM ELECTRICAL AND ELECTRONIC EQUIPMENT Correlation to International Financial Reporting Interpretations Committee – IFRIC 6

Index Item
REFERENCES
INTRODUCTION IN1 – IN2
CONTEXT 1 – 5
SCOPE 6 – 7
ISSUE 8
CONSENSUS 9
EFFECTIVE DATE 10

References

Technical Pronouncement CPC 23 – Accounting Policies, Changes in Accounting Estimates and Errors
Technical Pronouncement CPC 25 – Provisions, Contingent Liabilities and Contingent Assets

CVM RESOLUTION NO. 145, OF JUNE 15, 2022
3

Introduction
IN1. Interpretation IFRIC 6 was issued by the International Accounting Standards Board (IASB) for a specific situation in the European Union. However, many Brazilian companies with corporate investments in that region need to apply it, and their investors in Brazil need to recognize its effects for equity method accounting and consolidation of financial statements. Therefore, the Accounting Pronouncements Committee (CPC) decided to issue this Interpretation in full conformity with its original version.

IN2. In addition to the comments in the previous item, situations similar to those discussed in the Interpretation may occur in other regions, including Brazil. The basic principles contained in this Interpretation also serve as a basis for the accounting recording of these situations.

Context

Item 17 of Technical Pronouncement CPC 25 specifies that an event that creates an obligation is a past event that creates a present obligation, for which the entity has no realistic alternative but to settle the obligation created by the event.
Item 19 of Technical Pronouncement CPC 25 states that provisions should be recognized only for “obligations that arise from past events that exist independently of the future actions of the entity.”
The European Union Directive on Waste Electrical and Electronic Equipment, which regulates the collection, treatment, recovery and environmentally sound disposal of waste equipment in that region, gave rise to questions about when the liability for decommissioning, according to that Directive, should be recognized. The Directive distinguishes between “new” and “historical” waste and between waste from private households and waste from sources other than private households. New waste is related to products sold after a certain date (August 13, 2005). All residential equipment sold before that date is considered to originate from historical waste, for the purposes of the Directive.
The Directive states that the cost of waste management for historical residential equipment must be borne by manufacturers of this type of equipment that are in the market during a period to be specified in the applicable legislation of each member state (the measurement period). The Directive declares that each member state will establish a mechanism for manufacturers to contribute to costs proportionally, “that is, in proportion to their respective market share by equipment type.”
Several terms used in the Interpretation, such as “market share” and “measurement period,” may be defined differently in the legislation of each member state. For example, the duration of the measurement period may be one year or only one month. Similarly, the measurement of market share and the formulas to calculate the obligation

CVM RESOLUTION NO. 145, OF JUNE 15, 2022
4 may be different in the legislation of each country. However, these examples affect only the measurement of the liability, which is not within the scope of the Interpretation.

Scope
6. This Interpretation provides guidance on the recognition, in the financial statements of manufacturers, of liabilities for waste management provided for in the European Union Directive on Waste Electrical and Electronic Equipment regarding the sale of historical residential equipment.

The Interpretation does not deal with new waste or historical losses from sources other than private households. The liability for this waste management is adequately covered by Technical Pronouncement CPC 25. However, if local legislation treats new waste from private households similarly to historical waste from private households, the principles of the Interpretation apply by reference to the hierarchy in items 10 to 12 of Technical Pronouncement CPC 23. The hierarchy of Technical Pronouncement CPC 23 is also relevant for other regulations that impose obligations, in a manner similar to the cost allocation model specified in said Directive.

Issue
8. The Interpretation was prepared to determine, in the context of the decommissioning provided for in the European Union Directive on Waste Electrical and Electronic Equipment, what constitutes the triggering event of the obligation, according to item 14(a) of Technical Pronouncement CPC 25, for the recognition of a provision for waste management costs:

the manufacture or sale of historical household equipment?
participation in the market during the measurement period?
the non-occurrence of costs in carrying out waste management activities?

Consensus
9. Participation in the market during the measurement period is the triggering event of the obligation, according to item 14(a) of Technical Pronouncement CPC 25. As a consequence, the liability for waste management costs for historical household equipment does not arise when the products are manufactured or sold. Since the obligation for historical household equipment is linked to market participation during the measurement period and not to the production or sale of the items to be disposed of, there is no obligation, except and until there is a market participation during the measurement period. The timing of the triggering event may also be independent of the specific period in which activities to carry out waste management are undertaken and related costs are incurred.

CVM RESOLUTION NO. 145, OF JUNE 15, 2022
5

Effective Date
10. This Interpretation must be applied together with the initial adoption of Technical Pronouncement CPC 25.

Lineage: No known changes