Explanatory Note to CVM Instruction No. 502 of September 1, 2011

EXPLANATORY NOTE TO CVM INSTRUCTION NO. 502, OF SEPTEMBER 1, 2011 Ref: CVM Instruction No. 502, of September 1, 2011, which alters Annexes A, B, C, and D of CVM Instruction No. 489, of January 14, 2011.

As provided in Article 2 of CVM Instruction No. 489/11, FIDCs, FIC-FIDCs, FIDC-PIPSs, and FIDC-NPs, unless otherwise provided, must apply the accounting criteria for recognition, classification, and measurement of assets and liabilities, as well as for revenue recognition and expense appropriation, set forth in the accounting standards issued by this Commission applicable to publicly held companies, which deal with the recognition and measurement, presentation, and disclosure of financial instruments.

With respect to the classification of financial instruments, the specific standard to be followed is Technical Pronouncement CPC 39 – Financial Instruments: Presentation, approved by CVM Deliberation No. 604/09. However, it is necessary to recall that the Pronouncement, in this case, is a standard underlying CVM Instructions 489/11 and 356/01. In an analysis based exclusively on the underlying standard, one could conclude that the accounting classification of the senior quota should be in the fund's liabilities, given that it does not perfectly fit the requirements provided therein to be classified as an equity instrument.

However, there are some particularities, in the case of FIDCs, that are not covered in International Financial Report Standards - IFRS (intended for publicly held companies), but that must be considered. In this sense, there are at least three provisions in CVM Instruction No. 356/01 that must be considered, namely:

I – Article 36 expressly prohibits the managing institution from contracting or assuming, in the name of the fund, obligations not expressly provided for, therefore not considering the issuance of senior quotas as raising third-party resources, that is, not considering the senior quota as a liability of the fund;

II – Article 2, item III, defines FIDCs as a communion of resources, which includes, certainly, senior quota holders. Thus, the rights of fund participants (senior and subordinated) are shared, differing only in the form of remuneration, which for subordinated holders is subsequent to that of senior holders, in a manner analogous to preferred and ordinary shares in the case of publicly held companies; and

III – Article 26 attributes rights to the senior quota, within the scope of a general meeting, that are significantly different from the rights usually attributed to creditors.

EXPLANATORY NOTE TO CVM INSTRUCTION NO. 502, OF SEPTEMBER 1, 2011

Another aspect to be considered is that the senior quota, generally, has a remuneration established much more in line with a benchmark of the fund's natural profitability than with a liability normally characterized, that is, its nature is not similar to liabilities normally considered in the currently effective accounting standards. This characteristic of fund quotas arises from the condominium nature of investment funds.

Thus, based on the special characteristics of FIDCs not covered or addressed directly in international accounting standards, CVM Instruction No. 502, of September 1, 2011, alters Annexes A, B, C, and D of CVM Instruction No. 489, of January 14, 2011, exclusively to contemplate the understanding that the senior quota can and must be classified as an item of the net assets of Securitization Funds.

Original signed by
MARIA HELENA DOS SANTOS FERNANDES DE SANTANA
President