CVM Resolution No. 94 Approves Consolidated Technical Pronouncement CPC 05(R1) on Related Party Disclosures

SECURITY AND EXCHANGE COMMISSION OF BRAZIL (CVM) Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – CEP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/SP – CEP: 01333-010 – Brazil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Corporate Financial Center Building, S.404/4th Floor, Brasília/DF – CEP: 70712-900 – Brazil - Tel.: (61) 3327-2030/2031 www.cvm.gov.br

CVM RESOLUTION NO. 94, OF MAY 20, 2022
Approves the Consolidation of Technical Pronouncement CPC 05(R1) of the Accounting Pronouncements Committee – CPC, which deals with disclosure about related parties.

THE PRESIDENT OF THE SECURITY AND EXCHANGE COMMISSION OF BRAZIL – CVM makes public that the Collegiate Board, in a meeting held on April 14, 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 It is made mandatory for publicly-held companies to apply Technical Pronouncement CPC 05(R1), which deals with disclosure about related parties, issued by the Accounting Pronouncements Committee - CPC, as consolidated in Annex “A” to this Resolution.

Art. 2 Deliberation 642, of October 07, 2010, is revoked, from the effective date of this Resolution.

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

Signed electronically by
MARCELO BARBOSA
President

CVM RESOLUTION NO. 94, OF MAY 20, 2022
ANNEX “A”
ACCOUNTING PRONOUNCEMENTS COMMITTEE
TECHNICAL PRONOUNCEMENT CPC 05 (R1)
Disclosure about Related Parties
Correlation to International Accounting Standards – IAS 24 (IASB – BV2010)

Summary Item
OBJECTIVE 1
SCOPE 2 – 4
PURPOSE OF DISCLOSURE ABOUT RELATED PARTIES 5 – 8 DEFINITIONS 9 – 12 DISCLOSURE 13 – 27 All entities 13 – 24 Entities related to the State 25 – 27 TRANSITIONAL PROVISIONS 28 – 29 REVOCATION OF ANOTHER PRONOUNCEMENT 30 ILLUSTRATIVE EXAMPLES EXPLANATORY NOTE TO THE PRONOUNCEMENT

CVM RESOLUTION NO. 94, OF MAY 20, 2022

Objective

The objective of this Technical Pronouncement is to ensure that the entity’s financial statements contain the disclosures necessary to draw the attention of users to the possibility that the entity’s balance sheet and statement of profit or loss may be affected by the existence of related parties and by transactions and balances, including commitments, with such related parties.

Scope
2. This Pronouncement shall be applied:
(a) in the identification of relationships and transactions with related parties; (b) in the identification of outstanding balances, including commitments, between the reporting entity and its related parties; (c) in the identification of circumstances under which disclosure of items (a) and (b) is required; and (d) in the determination of the disclosures to be made about these items.

This Technical Pronouncement requires disclosure of relationships with related parties, of transactions and outstanding balances with related parties, including commitments, in the consolidated and separate financial statements of the parent or investors with joint control of the investee or with significant influence over it, presented in accordance with Technical Pronouncements CPC 35 – Separate Financial Statements and CPC 36 – Consolidated Financial Statements. This Technical Pronouncement shall also be applied to individual financial statements.
Transactions with related parties and outstanding balances with other entities of the economic group shall be disclosed in the entity’s financial statements. Intercompany transactions and balances existing with related parties are eliminated, except with respect to those between the investment entity and its subsidiaries measured at fair value through profit or loss, in the preparation of the economic group’s consolidated financial statements.

Purpose of disclosure about related parties
5. Relationships with related parties are a normal characteristic of commerce and business. For example, entities frequently carry out part of their activities through subsidiaries, jointly controlled operations (joint ventures) and associates. In these circumstances, the entity has the ability to affect the financial and operating policies of the investee through full control, shared control or significant influence.

The relationship with related parties may have an effect on the entity’s statement of profit or loss and balance sheet. Related parties may effect transactions that unrelated parties would not. For example, the entity that sells goods to its parent at cost may not sell under these conditions to another customer. In addition, transactions between related parties may not be made for the same amounts as would be between unrelated parties.
The entity’s statement of profit or loss and balance sheet may be affected by a relationship with related parties even if no transactions occur with these related parties. The mere existence of the relationship may be sufficient to affect the entity’s transactions with other parties. For example, a subsidiary may cease relations with a business partner when the parent acquires another subsidiary dedicated to the same activity as the previous business partner. Alternatively, a party may refrain from acting because of the significant influence of another. For example, a subsidiary may be instructed by its parent not to engage in research and development activities.
For these reasons, knowledge of the entity’s transactions, outstanding balances, including commitments, and relationships with related parties may affect the assessments of its operations by users of the financial statements, including the assessments of the risks and opportunities with which the entity is faced.

Definitions
9. The following terms are used in this Technical Pronouncement with the meanings specified below:

Related party is the person or entity that is related to the entity that is preparing its financial statements (in this Technical Pronouncement, treated as the “reporting entity”).

(a) A person, or a close member of that person’s family, is related to the reporting entity if that person:
(i) has control or joint control of the reporting entity; (ii) has significant influence over the reporting entity; or (iii) is a member of key management personnel of the reporting entity or of the parent of the reporting entity.

(b) An entity is related to the reporting entity if any of the following conditions applies:
(i) the entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others); (ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a parent of the other entity); (iii) both entities are joint ventures of the same third party; (iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity; (v) the entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the employees of the reporting entity are also deemed to be related to the reporting entity; (vi) the entity is controlled, or jointly controlled, by a person identified in (a); (vii) a person identified in (a)(i) has significant influence over the entity, or is a member of key management personnel of the entity (or of a parent of the entity); (viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity.

Transaction with a related party is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged in exchange.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity and include:
(a) that person’s children and spouse or domestic partner; (b) children of that person’s spouse or domestic partner; and (c) dependents of that person, that person’s spouse or domestic partner.

Remuneration includes all employee and director benefits (as defined in Technical Pronouncement CPC 33 – Employee Benefits), including benefits within the scope of Technical Pronouncement CPC 10 – Share-based Payment. Employee benefits are all forms of consideration paid, payable or provided by the entity, or on behalf of the entity, in exchange for services rendered to the entity. It also includes consideration paid on behalf of the entity’s parent in respect of the entity. Remuneration includes:
(a) short-term employee and director benefits, such as salaries, wages and social security contributions, paid leave and sick leave, profit sharing and bonuses (if payable within twelve months after the end of the reporting period) and non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services) for current employees and directors; (b) post-employment benefits, such as pensions, other retirement benefits, post-employment life insurance and post-employment medical care; (c) other long-term benefits, including long-service leave or sabbatical leave, jubilee or other long-service benefits, long-term disability benefits and, if not payable wholly within twelve months after the end of the reporting period, profit sharing, bonuses and deferred remuneration; (d) termination benefits; and (e) share-based payment.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (executive or otherwise) of that entity.

State refers to government in its broad sense, government agencies and similar bodies, whether municipal, state, federal, national or international.

Entity related to the State is the entity that is controlled, jointly controlled, or subject to significant influence by the State.

The terms “control”, “investment entity”, “joint control” and “significant influence” are defined in Technical Pronouncements CPC 36, CPC 19 and CPC 18, respectively, and are used in this Technical Pronouncement with the meanings specified in those Technical Pronouncements.

In considering each of the possible relationships with related parties, attention should be directed to the substance of the relationship and not merely the legal form.
In the context of this Technical Pronouncement, the following are not related parties:
(a) two entities simply by having a director or other member of key management personnel in common, or because a member of key management personnel of one entity has significant influence over the other entity; (b) two joint venturers simply by sharing joint control over a joint venture; (c) (i) entities that provide financing; (ii) trade unions; (iii) public utility providers; and (iv) departments and agencies of the State that do not control, jointly control, or exercise significant influence over the reporting entity, simply by virtue of their normal dealings with the entity (even though they may affect the freedom of action of the entity or participate in its process of making decisions); (d) a customer, supplier, franchisor, concessionaire, distributor or general agent with whom the entity conducts a significant volume of business, merely by reason of the resulting economic dependence.
In the definition of related party, an associate includes subsidiaries of that associate and an entity under joint control (joint venture) includes subsidiaries of the entity under shared control (joint venture). Therefore, for example, the subsidiary of an associate and the investor that exercises significant influence over the associate are related parties to each other.

Disclosure
All entities

The relationships between the parent and its subsidiaries shall be disclosed regardless of whether there have been transactions between those related parties. The entity shall disclose the name of its direct parent and, if different, the ultimate parent. If neither the direct parent nor the ultimate parent prepares consolidated financial statements available to the public, the name of the next higher level parent in the ownership structure that does prepare such statements shall also be disclosed.
To enable users of financial statements to form a view about the effects of relationships between related parties on the entity, it is appropriate to disclose the relationship between related parties when control exists, whether or not transactions have occurred between the related parties.
The requirement to disclose related party relationships between parents and their subsidiaries is an additional requirement to that already required in Technical Pronouncements CPC 35 – Separate Financial Statements and CPC 45 – Disclosure of Interests in Other Entities.
Item 13 of this Pronouncement refers to the next higher level parent in the ownership structure. The next higher level parent in the ownership structure is the first parent of the group, above the immediate direct parent, that produces consolidated financial statements available to the public.
The entity shall disclose the total amount of remuneration of key management personnel in total and for each of the following categories:
(a) short-term employee and director benefits; (b) post-employment benefits; (c) other long-term benefits; (d) termination benefits; and (e) share-based payment.

17A. If the entity obtains services from key management personnel of another entity (administrative entity), the entity is not required to apply the requirements of item 17 to the remuneration paid or payable by the administrative entity to the employees or directors of the administrative entity.

If the entity has entered into transactions with related parties during the periods covered by the financial statements, the entity shall disclose the nature of the relationship between the related parties, as well as information about the transactions and outstanding balances, including commitments, necessary for users to understand the potential effect of that relationship on the financial statements. These disclosure requirements are additional to those referred to in item 17. At a minimum, the disclosures shall include:
(a) the amount of the transactions;
(b) the amount of outstanding balances, including commitments, and:
(i) their terms and conditions, including available security, and the nature of the consideration to be used in settlement; and (ii) details of any guarantees given or received; (c) the provision for doubtful debts related to the amount of outstanding balances; and (d) expense recognised during the period related to bad debts or doubtful debts of related parties.

18A. Amounts incurred by the entity for the provision of key management personnel services, which are provided by a separate administrative entity, shall be disclosed.

The disclosures required in item 18 shall be made separately for each of the following categories:
(a) parent;
(b) entities with joint control of the entity or significant influence over the reporting entity; (c) subsidiaries; (d) associates; (e) jointly controlled operations (joint ventures) in which the entity is a joint venturer; (f) key management personnel of the entity or of its parent; and (g) other related parties.
The classification of amounts payable to and receivable from related parties into different categories as required in item 19 is an extension of the disclosure requirements of Technical Pronouncement CPC 26 - Presentation of Financial Statements, for information to be provided in the balance sheet or in the accompanying notes. The categories of related parties are expanded to provide a more comprehensive analysis of balances between related parties, applying it to transactions with these parties.
Examples of transactions that shall be disclosed, if made with a related party, include:
(a) purchases or sales of goods (finished or unfinished); (b) purchases or sales of property and other assets; (c) rendering or receiving of services; (d) leases; (e) transfers of research and development; (f) transfers under licence agreements; (g) transfers of a financial nature (including loans and equity contributions in cash or cash equivalents); (h) provision of guarantees, endorsements or sureties; (i) commitments to do something if a particular event occurs or does not occur in the future, including executory contracts (whether recognised or not); and (j) settlement of liabilities on behalf of the entity or by the entity on behalf of a related party.
The participation of a parent or subsidiary in a defined benefit plan that shares risks between group entities is considered a transaction between related parties (see item 34B of Technical Pronouncement CPC 33 – Employee Benefits).

22A. For any transactions between related parties, disclosure of the conditions under which those transactions were effected is required. Atypical transactions with related parties after the end of the reporting period shall also be disclosed.

Disclosures that transactions with related parties were effected on terms equivalent to those prevailing in transactions with unrelated parties are made only if those terms can be effectively substantiated.

1 Technical Pronouncement CPC 25 - Provisions, Contingent Liabilities and Contingent Assets defines executory contracts as contracts under which neither party has fulfilled any of its obligations or both parties have partially fulfilled their obligations to an equal extent.

COMISSÃO DE VALORES MOBILIÁRIOS
Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brasil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brasil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4º Andar, Brasília/DF – CEP: 70712-900 – Brasil -Tel.: (61) 3327-2030/2031 www.cvm.gov.br RESOLUÇÃO CVM Nº 94, DE 20 DE MAIO DE 2022
24. Items of a similar nature may be disclosed in aggregate, except when separate disclosure is necessary for understanding the effects of transactions with related parties in the entity's financial statements.

Entities related to the State

The reporting entity is exempt from the disclosure requirements of item 18 regarding transactions and balances maintained with related parties, including commitments, when the party is:
(a) a state entity that has control, joint control, or significant influence over the reporting entity; and (b) another entity that is a related party, because the same state entity holds control or joint control, or exercises significant influence, over both parties (the reporting entity and the other entity).
If the reporting entity applies the exemption of item 25, it must disclose the following regarding balances and transactions referred to in item 25:
(a) the name of the state entity and the nature of its relationship with the reporting entity (e.g., control, full or shared, or significant influence); (b) the following information, in sufficient detail, to enable users of the entity's financial statements to understand the effects of related party transactions on its financial statements:
(i) nature and amount of each individually significant transaction; and (ii) for other transactions that are significant in aggregate but not individually, a qualitative and quantitative indication of their extent. Types of transactions include those listed in item 21.
When using judgment to determine the level of detail to be disclosed in accordance with the requirements of item 26(b), the management of the reporting entity must consider how close the relationship is with the related party, and other relevant factors for establishing the level of significance of the transaction, when assessing whether the transaction is:
(a) significant in terms of magnitude;
(b) carried out outside market conditions;
(c) outside the normal day-to-day business operations, such as the purchase and sale of businesses; (d) disclosed to supervisory or regulatory authorities; (e) reported to senior administrators; (f) subject to shareholder approval.

28 and 29. (Eliminated)

Revocation of another pronouncement

This Technical Pronouncement replaces CPC 05 - Disclosure about Related Parties, approved on 30.10.2008.

The following examples accompany, but are not an integral part of Technical Pronouncement CPC 05 - Disclosure about Related Parties. They illustrate:

the partial exemption for entities related to the State; and
how the definition of related party would be applied in specific circumstances.

In the examples, references to financial statements should be understood as references to individual, separate, or consolidated financial statements.

Partial exemption for entities related to the state

Example 1 – Disclosure exemption (item 25)

EI1. State entity G directly or indirectly controls entities 1 and 2 and entities A, B, C, and D. Person X is a member of key management personnel of entity 1.

EI2. For the financial statements of entity A, the exemption of item 25 must be applied to:
(a) transactions with state entity G; and
(b) transactions with entities 1 and 2 and with entities B, C, and D.

However, the exemption must not be applied to transactions with person X.

Disclosure requirements when the exemption is applied (item 26)

EI3. In the financial statements of entity A, an example of disclosure to fully comply with item 26(b)(i), for individually significant transactions, could be:

State Entity G
Entity 1
Entity A
Entity 2
Entity B Entity C Entity D
Person X

COMISSÃO DE VALORES MOBILIÁRIOS
Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brasil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brasil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4º Andar, Brasília/DF – CEP: 70712-900 – Brasil -Tel.: (61) 3327-2030/2031 www.cvm.gov.br RESOLUÇÃO CVM Nº 94, DE 20 DE MAIO DE 2022 Example of disclosure for individually significant transactions carried out outside market conditions

On January 15, 20X1, entity A, a public service company of essential character, over which state entity G indirectly holds 75% of the shares, sold an area of 10 hectares to another entity related to the State, also a provider of essential public services, for $5 million. On December 31, 20X0, a plot of land in a similar location, of similar size and with similar characteristics, was sold for $3 million. No appreciation or depreciation of the area occurred in this interim period. See note X (to the financial statements) for disclosure of government assistance, as required by Technical Pronouncement CPC 07 - Subsidies and Government Assistance, and notes Y and Z (to the financial statements) to comply with other relevant CPC technical pronouncements.

Example of disclosure for individually significant transactions resulting from the size of the transaction

In the year ended December 20X1, state entity G granted entity A, a public service company of essential character, over which state entity G indirectly holds 75% of the shares, a loan equivalent to 50% of its capitalization (funding) needs, to be paid in quarterly installments over the next 5 years. The interest charged on the loan was 3% p.a., which is comparable to the cost entity A would normally incur in bank loans 2.

See notes Y and Z (to the financial statements) to comply with other relevant CPC technical pronouncements.

Example of disclosure of collectively significant transactions

In the financial statements of entity A, an example of disclosure to fully comply with item 26(b)(ii), for collectively significant transactions, may be:

State entity G indirectly holds 75% of the shares of entity A. The significant transactions of entity A with state entity G and with other entities controlled, fully or jointly, or subject to significant influence by state entity G are [a large part of its revenue from product sales or purchases of raw materials] or [about 50% of its revenue from product sales and about 35% of its purchases of raw materials].

The company also benefits from the guarantees of state entity G in bank loans obtained. See note X (to the financial statements) for disclosure of government assistance, as required

If the reporting entity concludes that this transaction constitutes government assistance, it must take into consideration the disclosure requirements set forth in Technical Pronouncement CPC 07 - Subsidies and Government Assistance.

COMISSÃO DE VALORES MOBILIÁRIOS
Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brasil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brasil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4º Andar, Brasília/DF – CEP: 70712-900 – Brasil -Tel.: (61) 3327-2030/2031 www.cvm.gov.br RESOLUÇÃO CVM Nº 94, DE 20 DE MAIO DE 2022 by Technical Pronouncement CPC 07 - Subsidies and Government Assistance, and notes Y and Z (to the financial statements) to comply with other relevant CPC Technical Pronouncements.

Definition of related party

Example 2 – Associates and subsidiaries

EI4. The controlling entity holds control of entities A, B, and C and exercises significant influence over entities 1 and 2. Subsidiary C exercises significant influence over associate 3.

EI5. For the purposes of separate and individual financial statements, subsidiaries A, B, and C and associates 1, 2, and 3 are considered related parties [item 9(b)(i) and (ii)].

EI6. For the purposes of the financial statements of subsidiary A, the controlling entity, subsidiaries B and C, and associates 1, 2, and 3 are considered related parties. For the purposes of the separate and individual financial statements of subsidiary B, the controlling entity, subsidiaries A and C, and associates 1, 2, and 3 are considered related parties. For the purposes of the financial statements of subsidiary C, the controlling entity, subsidiaries A and B, and associates 1, 2, and 3 are considered related parties [item 9(b)(i) and (ii)].

EI7. For the purposes of the financial statements of associates 1, 2, and 3, the controlling entity and subsidiaries A, B, and C are considered related parties. Associates 1, 2, and 3 are not considered related parties to each other [item 9(b)(ii)].

EI8. For the purposes of the consolidated financial statements of the controlling entity, associates 1, 2, and 3 are

Controlling Entity
Subsidiary A Subsidiary B
Subsidiary C
Associate 1 Associate 2
Associate 3

COMISSÃO DE VALORES MOBILIÁRIOS
Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brasil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brasil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4º Andar, Brasília/DF – CEP: 70712-900 – Brasil -Tel.: (61) 3327-2030/2031 www.cvm.gov.br RESOLUÇÃO CVM Nº 94, DE 20 DE MAIO DE 2022 considered related parties to the economic group [item 9(b)(ii)].

Example 3 – Key management personnel

EI9. Person X holds 100% investment in entity A and is a member of key management personnel of entity C. Entity B holds 100% investment in entity C.

EI10. For the purposes of the financial statements of entity C, entity A is a related party to entity C because person X controls entity A and is a member of key management personnel of entity C [item 9(b)(vi)-(a)(iii)].

EI11. For the purposes of the financial statements of entity C, entity A is also a related party to entity C if person X is a member of key management personnel of entity B and is not of entity C [item 9(b)(vi)-(a)(iii)].

EI12. Furthermore, the possible situations described in items EI10 and EI11 produce the same effects if person X jointly controls entity A [item 9(b)(vi)-(a)(iii)]. (If person X exercises only significant influence over entity A and does not control it fully or jointly, then entities A and C are not considered related parties to each other).

EI13. For the purposes of the financial statements of entity A, entity C is a related party to entity A because person X controls entity A and is a member of key management personnel of entity C [item 9(b)(vii)-(a)(i)].

EI14. Furthermore, the possible situation described in item EI13 produces the same effect if person X jointly controls entity A. It will also produce the same effect if person X is a member of key management personnel of entity B and is not of entity C [item 9(b)(vii)-(a)(i)].

EI15. For the purposes of the consolidated financial statements of entity B, entity A is a related party as an economic group, if person X is a member of key management personnel of the group [item 9(b)(vi)-(a)(iii)].

Person X Entity B
Entity A Entity C

EI16. Person X has investment in entity A and in entity B

EI17. For the purposes of the financial statements of entity A, if person X controls, fully or jointly, entity A, entity B is considered a related party of entity A when X controls, fully or jointly, or exercises significant influence over entity B [item 9(b)(vi)-(a)(i) and item 9(b)(vii)-(a)(i)].

EI18. For the purposes of the financial statements of entity B, if person X controls, fully or jointly, entity A, entity A is considered a related party of entity B when X controls, fully or jointly, or exercises significant influence over entity B [item 9(b)(vi)-(a)(i) and item 9(b)(vi)-(a)(ii)].

EI19. If person X exercises significant influence over both entities A and B, entities A and B are not considered related parties to each other.

Example 5 – Close family members holding investment holding

EI20. Person X is a partner of Y. Person X has investment in entity A and person Y has investment in entity B.

EI21. For the purposes of the financial statements of entity A, if person X controls, fully or jointly, entity A, entity B is considered a related party to entity A when person Y controls, fully or jointly, or exercises significant influence over Person X Entity A Entity B Person X Person Y Entity A Entity B

COMISSÃO DE VALORES MOBILIÁRIOS
Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brasil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brasil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4º Andar, Brasília/DF – CEP: 70712-900 – Brasil -Tel.: (61) 3327-2030/2031 www.cvm.gov.br RESOLUÇÃO CVM Nº 94, DE 20 DE MAIO DE 2022 entity B [item 9(b)(vi)-(a)(i) and item 9(b)(vii)-(a)(i)].

EI22. For the purposes of the financial statements of entity B, if person X controls, fully or jointly, entity A, entity A is considered a related party to entity B, when person Y controls, fully or jointly, or exercises significant influence over entity B [item 9(b)(vi)-(a)(i) and item 9(b)(vi)-(a)(ii)].

EI23. If person X exercises significant influence over entity A and person Y exercises significant influence over entity B, entities A and B are not considered related parties to each other.

Example 6 – Entity exercising joint control (venturer)

EI24. Entity A jointly controls entity B and, simultaneously, exercises significant influence and jointly controls entity C.

EI25. For the purposes of the financial statements of entity B, entity C is considered a related party to entity B [item 9(b)(iii) and (iv)].

EI26. Similarly, for the purposes of the financial statements of entity C, entity B is considered a related party to entity C [item 9(b)(iii) and (iv)].

Example 7 - Other transactions that must be disclosed

EI27. If they occur with a related party, in addition to those listed in item 21 of the Pronouncement, the following transactions must be disclosed:
(a) provision of administrative services and/or any form of use of the physical structure or personnel of the entity by the other or others, with or without financial consideration; (b) acquisition of rights or purchase options or any other type of benefit and its respective exercise of the right; (c) any transfers of assets, rights, and obligations; (d) granting of bailments of real or movable assets of any nature;

Entity A
Entity B Entity C

COMISSÃO DE VALORES MOBILIÁRIOS
Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brasil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brasil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4º Andar, Brasília/DF – CEP: 70712-900 – Brasil -Tel.: (61) 3327-2030/2031 www.cvm.gov.br RESOLUÇÃO CVM Nº 94, DE 20 DE MAIO DE 2022 (e) maintenance of any benefits for related party employees, such as: supplementary social security plans, health care plans, cafeterias, recreation centers, etc.; (f) market and technological limitations.

NE1. This explanatory note accompanies, but is not an integral part of the Pronouncement. This note is intended to highlight situations where the Pronouncement has certain differences with respect to the International Accounting Standards issued by the IASB, and to comment on them thereafter.

NE2. Item 22A does not exist in the IASB version; thus, it is an additional requirement in Brazil, but not necessarily in other jurisdictions.

NE3. Example 7, item EI 27, of the illustrative examples annex, which accompanies, but is not an integral part of the Pronouncement, does not exist in the IASB version; this was an additional example that does not contradict the Pronouncement.

NE4. The IASB, through its document titled Statement of Best Practice: Working Relationships between the IASB and other Accounting Standard-Setters, admits that jurisdictions may impose additional information requirements beyond those required by it. And declares that this does not prevent financial statements thus prepared from being declared as being in compliance with the International Accounting Standards issued by it.

NE5. Thus, the existence of the differences commented on in items NE2 and NE3 does not mean that disclosures about related parties according to this Pronouncement are not in compliance with IASB standards.

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