Joint Circular CVM/SIN/SPREV No. 4/2020

SECURITIES 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 - www.cvm.gov.br

Joint Circular No. 4/2020/CVM/SIN/SPREV
Rio de Janeiro, August 14, 2020

To the Directors Responsible for the Administration and Management of Investment Funds

Subject: Clarifications regarding CMN Resolution No. 3,922, of November 25, 2010, amended by Resolution No. 4,604, of October 19, 2017 (impossibility of postponing deadlines in investment funds with RPPS unitholders and non-compliant with CMN Resolution 3,922/2010).

Dear Sirs,

1. The Resolution of the National Monetary Council - CMN No. 4,604, approved in a meeting
   on October 19, 2017, amended CMN Resolution No. 3,922, of November 25, 2010, and defined, among other things, the situations and deadlines in which resources from Self-Managed Social Security Regimes (RPPS) could be maintained in investment funds that were non-compliant with the legislation.

Art. 21. Self-managed social security regimes that, due to the entry into force of this Resolution or its amendments, come to present investments in disagreement with what is established, may keep them in their portfolio for up to 180 days.

§ 1st The investments that have deadlines for maturity, redemption, waiting period or for conversion of investment fund shares provided for in their then current regulations may be kept in the portfolio until the respective date, if superior to the period provided in the caput.

2. In the caput of Article 21, it was defined that RPPS investments in non-compliant investment funds
   due to changes in legislation could only be maintained for a period of 180 days. Paragraph 1 of this article, in turn, brought the only exception to this rule, by allowing maintenance for a period longer than the maximum established (180 days) for funds where there is a maturity deadline (generally for closed-end funds), redemption, waiting period or conversion determined.

3. The paragraph concludes by stating that this exception is valid only when these deadlines
   are established before the amendment of the Resolution, that is, in the then current regulation. Thus, it is only under this condition that RPPS resources can be maintained in non-compliant funds; otherwise, they violate what is established by the Resolution.

4. In this sense, those responsible for RPPS must not allow (whether by action or
   omission) changes to the regulations to postpone this deadline, as it is in conflict with the norm that should guide their decisions (and which is directed precisely towards the opposite direction).

5. It is also important to note that investment fund managers and administrators,
   in respect of their duty of diligence, must observe and comply with the legislation, advising the RPPS and, within the terms of their competencies and attributions, rejecting or abstaining from proposing changes to regulations that have the objective of extending beyond what is strictly necessary a situation of non-compliance of the fund, persisting unduly in its non-compliance.

6. It is worth highlighting that the liquidation of funds that do not meet the CMN Resolution does
   not impose a new situation of non-compliance of the RPPS portfolio or irregularity in the conduct of the regime's management. On the contrary, all efforts should be made towards the liquidation of the fund or the realization of a plan for the recovery of illiquid assets and for the receipt of values related to the portion of the portfolio with market value. With the fund in liquidation, with the appropriate approval of a corresponding plan, it will be conducted with the exclusive purpose of closing its activities, which makes sense for a non-compliant fund without prospects of compliance.

7. Regarding the deadline, it is necessary to observe the applicable norms and the rationale of the proposed liquidation plan, considering that the liquidation of assets may require specific time regarding their characteristics and market situation. The legislation does not require the immediate delivery of assets to unitholders, but rather that actions be initiated with a view to the complete liquidation of assets, always in the best interest of unitholders, adopting measures that will resolve the fund's situation and not persist in the same circumstance. However, this fact does not prevent the eventual delivery of assets from being deliberated in a meeting convened for this purpose, if it is understood by the majority as a measure necessary to facilitate liquidation, in which case this would also not imply the non-compliance of the RPPS with respect to the CMN Resolution.

8. Finally, it is noted that CVM and SPREV, in accordance with the Technical Cooperation Agreement published on December 24, 2015, have intensified the exchange of information and the execution of coordinated supervision actions for the segments under their responsibility, aiming to achieve greater efficiency and effectiveness in their respective areas of operation.

Sincerely,

Signed by
DANIEL WALTER MAEDA BERNARDO
Superintendent of Institutional Investor Relations of the Securities and Exchange Commission

Signed by
NARLON GUTIERRE NOGUEIRA
Secretary of Social Security of the Special Secretariat of Social Security and Labor of the Ministry of Economy