Joint Decision CVM/SPC No. 05 of June 9, 1998

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JOINT DECISION CVM/SPC NO. 05, OF JUNE 9, 1998 SECURITY AND EXCHANGE COMMISSION OF BRAZIL - CVM SECRETARIAT OF COMPLEMENTARY PENSION - SPC

Establishes conditions for investment in mutual funds for investment in stocks - free portfolio, constituted in the form of a closed condominium, with a minimum duration period determined and composed of second-line or lower liquidity shares, by closed private pension entities.

The Board of Directors of the Security and Exchange Commission of Brazil - CVM and the Secretary of the Secretariat of Complementary Pension - SPC, of the Ministry of Social Security and Assistance, having regard to the provisions of Resolution No. 2,467, of February 19, 1998, of the National Monetary Council - CMN,

DECIDE:

Art. 1 - Establish that the investment in cash, shares and/or subscription bonuses of shares by closed private pension entities - EFPP, in quotas of mutual funds for investment in stocks - free portfolio - FMIA-CL, constituted in the form of a closed condominium, with a determined minimum duration period and composed of second-line or lower liquidity shares, intended for qualified investors, duly registered with the CVM and regulated by it in accordance with CVM Instructions 215/94 and 254/96, must comply with the following conditions.

I - be carried out in a closed fund, whose regulations, approved by the CVM, establish at least the characteristics below:

a) have as its objective the investment in shares and/or subscription bonuses of shares, issued by second-line or lower liquidity companies, thus defined those that, on the date of full payment, are not among the ten most traded shares on the Stock Exchange with the highest liquidity, as determined through an order to compose a recognized Stock Index, calculated by criterion of financial volume traded and updated by it periodically;

b) have a minimum duration period of not less than three years and a maximum duration period of not more than ten years, both counted from the date of the first subscription of quotas;

c) have the obligation to list quotas for trading on a Stock Exchange or Organized OTC Market regulated by the CVM;

d) have a Consultative Council or Investment Committee - formed by at least three members, including at least one representative of the quota holders and one representative of the Administrator - charged, among other duties, to evaluate, resolve conflicts and define pricing; and

e) define criteria for automatic pricing for full payment with shares and/or subscription bonuses of shares that meet minimum negotiability and liquidity requirements, measured respectively by minimum monthly financial volume realized and minimum trading in auctions or trading sessions in the month, referring to the Consultative Council or Investment Committee the other cases, observed that:

1. for the purposes of automatic pricing, the criterion used, to assign price to the shares and/or subscription bonuses of shares that will fully pay

2 the quotas of the FMIA-CL, must be the value of its average quotation, weighted by the quantity traded, in the last 20 consecutive auctions or trading sessions, in the market where it has the highest liquidity, provided that such shares meet a minimum limit of negotiability and liquidity not lower than the following:

1.1) minimum trading, in the last three months, greater than R$ 200,000.00 (two hundred thousand reais) per month, considering each month a separate event; and

1.2) trading recorded, in the last three months, in at least one third of the auctions or trading sessions, considering each month a separate event.

2. in other cases, that is, when the minimum limits of negotiability and liquidity for automatic pricing are not met, in whole or in part, the value of the share will be fixed based on fundamentalist analysis prepared by the Administrator and approved by the Consultative Council or Investment Committee.

II - respect the limits of application and/or diversification established in the regulation applicable to EFPP, adding for the purpose of verifying compliance, the shares and/or subscription bonuses of shares that make up the funds referred to in the caput of this article, to the similar shares held directly and indirectly by the EFPP.

Art. 2 - It is prohibited for EFPP to fully pay quotas of the funds, referred to in Article 1, with shares and/or subscription bonuses of shares, held directly or indirectly, that grant to the EFPP, on the date of pricing, a seat on the Board of Directors of the issuing open company.

Art. 3 - At the time of each full payment of quotas in shares, the EFPP must attach, to the subscription bulletin, a declaration that its position in said shares does not infringe the limits set forth in the regulation applicable to it and respects the prohibition set forth in Art. 2 of this Joint Decision.

Art. 4 - The provisions of Article 1 of Joint Decision No. 2, of February 26, 1998, do not apply to the investment in the funds referred to in Article 1 of this.

Art. 5 - Closed private pension entities that make use of the faculty provided for in this Joint Decision must send information relevant to the matter to the SPC, in the form and within the period to be determined by the Secretariat.

Art. 6 - Non-observance of the provisions of this Joint Decision will subject the EFPP and their administrators, as well as the administrators of the mutual fund, within the scope of their respective spheres of competence, to the sanctions provided for in the legislation and regulation in force.

Art. 7 - This Joint Decision enters into force on the date of its publication in the Official Gazette of the Union.

FRANCISCO DA COSTA E SILVA
President of the
SECURITY AND EXCHANGE COMMISSION OF BRAZIL

PAULO KLIASS
Secretary of the
SECRETARIAT OF COMPLEMENTARY PENSION