Explanatory Note to CVM Instruction 050

EXPLANATORY NOTE TO CVM INSTRUCTION NO. 50.
Ref.: CVM INSTRUCTION NO. 050, of April 24, 1986, which provides for the special monetary correction of the Extraordinary Financial Statements of 02.28.86.

According to the system of monetary correction of financial statements, permanent assets and equity, formed over each monthly period, were not being corrected within the month of their incorporation, which resulted in a lag in the corrected values, equivalent on average to half a month in the balance sheet. An identical lag occurred regarding most realizable assets and payable liabilities, as they only underwent correction starting from the month following their formation.

With the advent of the monetary reform, it became necessary to perform pro rata correction of monetary assets and liabilities when preparing the Extraordinary Financial Statements of 02.28.86. Consequently, the balance that had been maintained in the previous system was broken.

To restore this asset balance, it is imperative to update permanent assets and equity, based on a pro rata correction as well.

Since the geometric mean between the ORTN of February (Cr$ 93,039.40) and the OTN of March (Cz$ 106.40) corresponds to Cz$ 99.50, this value must be used for the special monetary correction of the Extraordinary Financial Statements of 02.28.86.

The balance of this special correction, being a result of the monetary reform, should be considered in the calculation of the Economic Stabilization Program Adjustments.

Thus, CVM INSTRUCTION NO. 048, of 03.20.86, is complemented, which aims to highlight the effects of the reform introduced by Decree-Laws No. 2283 and 2284/86.