Explanatory Note to CVM Instruction No. 315 of September 27, 1999

EXPLANATORY NOTE TO CVM INSTRUCTION NO. 315, OF SEPTEMBER 27, 1999.

Ref.: CVM Instruction No. 315, of September 27, 1999, which establishes the procedure for confidential preliminary analysis of requests for registration of the issuance and public distribution of securities and of open companies, under the conditions it specifies.

The CVM has based its relationship with regulated entities that request registration for the issuance and public distribution of securities and of open companies on transparent rules for the instruction and processing of registration request processes, considering public the documents and information submitted at the time of the registration request.

However, difficulties arise in some public distribution operations that aim at the simultaneous offer of securities in the Brazilian market and abroad, subject to registration before the CVM and regulatory authorities of the capital markets abroad. It has been observed that in some cases, the publicity of the procedure is not a rule uniformly adopted by regulatory authorities of other countries, which allow, under certain circumstances, the submission of documents in draft form, in a confidential manner.

Given the growing globalization of the world economy, directly and inexorably affecting the capital markets, problems arising from the lack of compatibility between the legal regimes of countries have become recurrent, despite the convergent interest in the circulation of wealth internationally. Therefore, it is necessary to flexibilize legal forms so that Brazil's exchange with other countries is not made unfeasible, provided there is no offense to the national legal order.

In this sense, this Instruction establishes the confidential preliminary analysis procedure as an adequate formula to circumvent difficulties arising from the different treatment given by the CVM and by foreign regulatory entities, considering international commitments to seek harmonization of rules and procedures that allow for cross-border offerings of securities.

In light of what is provided in Article 3, which foresees the applicant's commitment to submit the definitive registration request, under the terms determined by the CVM in the preliminary analysis process, there will be no prejudice to the publicity of the procedure, which suffers mere postponement, to adjust to the procedure underway before the foreign authority. Thus, a more consistent form of information disclosure is privileged, curbing the emergence of speculation regarding the pricing of the securities to be offered. Ultimately, therefore, the procedure hereby established serves, with greater efficiency, the scope of a full information policy, placing itself in strict consonance with the transparency rules that guide the activity of the Autarchy.

It should be noted, in this regard, that the definitive registration request cannot innovate relative to the confidential preliminary analysis request, and must be presented in strict conformity with the terms of the opinion issued by the CVM in the preliminary stage, as provided in § 1 of Article 3 of this Instruction.

The procedure in question, as provided in Article 2 of the Instruction, may only be used in cases where the authorization to be granted abroad must be approved by a regulatory authority with which the CVM has signed a Memorandum of Understanding, so that, through the exchange of information, the real need for compatibility of procedures can be examined.

Furthermore, the preliminary analysis will be conditioned upon the presentation of proof of payment of the inspection fee in the same amount to be collected for the definitive registration request, in cases where such fee is due, in accordance with the provisions of § 2 of Article 3.

In accordance with Article 8, the confidential preliminary analysis procedure may be employed not only in requests for registration of global offerings of securities, but also in other cases where it is necessary to harmonize the CVM's procedures with related procedures, in a confidential regime, underway before foreign regulatory authorities. The request for approval of a "Depositary Receipts" program, in accordance with Resolution No. 1,927, of May 18, 1992, of the National Monetary Council, is an example of a process that can be submitted to the CVM under the protection of this Instruction.

Signed original by
LEONARDO BRUNET MENDES DE MORAES
Acting President