Resolution CMN No. 1660 Approves the Regulation Governing the Conversion of Fund Shares into Securities for FINAM, FINOR, FISET, and FUNRES

RESOLUTION NO. 001660

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the MONETARY COUNCIL, in a session held on October 25, 1989, considering the provisions of Law No. 6,385, of December 7, 1976, and the sole paragraph of Article 17 of Decree-Law No. 1,376, of December 12, 1974,

RESOLVES:

I - Approve the attached Regulation, which governs the conversion, into securities, of the shares issued by the Amazon Investment Fund (FINAM), the Northeast Investment Fund (FINOR), the Sectoral Investment Fund (FISET), and the Espírito Santo State Recovery Fund (FUNRES), as well as the trading of these shares.

II - The Securities and Exchange Commission (CVM) shall issue complementary norms and adopt the necessary measures for the execution of the provisions of this Resolution.

III - This Resolution shall enter into force on the date of its publication, revoking Resolution No. 381, of June 24, 1976, and any provisions to the contrary.

Brasília-DF, October 26, 1989

Wadico Waldir Bucchi
President

ATTACHED REGULATION TO RESOLUTION NO. 1,660, OF OCTOBER 26, 1989

CHAPTER I

OF THE ISSUANCE AND DAILY QUOTATION OF FUND SHARES

Art. 1. The shares of the Investment Funds referred to in Decree-Law No. 1,376/74 shall correspond to ideal fractions thereof and shall assume a registered and endorsable form.

Art. 2. The shares shall be represented by Investment Certificates (CI) and shall contain:

I - the denomination "Investment Certificate";

II - the name and headquarters of the Fund;

III - reference to Decree-Law No. 1,376/74;

IV - the name of the supervisory body and the operating bank;

V - the name and CGC or CPF of the investor;

VI - the serial number of the certificate;

VII - the invested amount, quantity, and unit issuance value of the shares;

VIII - the place and date of issuance of the certificate; and

IX - two signatures of representatives of the operating bank, with the use of a mechanical stamp permitted.

Art. 3. The value of the shares of FINOR, FINAM, FISET, and FUNRES, calculated daily with up to 4 (four) decimal places, shall be equal to the quotient of the division of the Fund's net asset value by the quantity of shares in circulation and estimated.

Paragraph 1. The Fund's net asset value is understood to be the sum of the available funds plus the realizable assets, plus the balance of the income accounts, minus the liabilities, as recorded in the respective accounting records.

Paragraph 2. Shares in circulation are understood to be those effectively issued.

Paragraph 3. Estimated shares are understood to be those resulting from the division of the amount of new resources entered into the Fund by the book value of the previous business day.

Art. 4. For valuation purposes, the stocks comprising the portfolios of the Funds referred to in Decree-Law No. 1,376/74 shall be computed at the average quotation value of the last day they were traded on an Exchange, or at the value obtained in an auction, whichever is lower; unlisted stocks shall be computed at their book value, based on the latest balance sheet of the company, if lower than the nominal value; and at the nominal value, if lower than the book value.

Paragraph 1. New stocks, while not listed on a Stock Exchange, during the maximum offering period of 6 (six) months, may be computed at their subscription value.

Paragraph 2. Shares represented by Forestry Participation Certificates (CPR), while not traded on Stock Exchanges, shall be computed at their value, in accordance with applicable legislation.

Art. 5. Shares resulting from subscription by the Federal Government, voluntary subscriptions, and subscriptions by other funds shall be issued at the book value of the business day immediately preceding the actual availability of the resources with the Funds.

Art. 6. With each entry of tax incentive resources allocated to the Funds, the quantity of "estimated shares" shall be calculated, in accordance with Paragraph 3 of Article 3 of this Regulation.

Art. 7. When there is an option to apply Fund resources, based on Article 18 of Decree-Law No. 1,376/74, with the wording given by Article 1 of Decree-Law No. 2,304, of November 21, 1986, the quantity of shares equivalent to this amount shall be deducted from the balance of "estimated shares" of the corresponding financial year, based on the book value of the business day immediately preceding.

Sole Paragraph. Regional or sectoral development agencies shall set, in common agreement with the operating banks, the final deadline for the release of the resources referred to in the "caput" of this article, relative to each financial year.

Art. 8. Once the final values allocated in the year are known, the Funds shall calculate the "conversion factor" which will be applied for the issuance of Investment Certificates.

Paragraph 1. The "conversion factor" shall be determined by dividing the balance of tax incentive resources allocated to the Funds in the corresponding financial year by the balance of "estimated shares" in the same year.

Paragraph 2. In the event of readjustments in the values of resources allocated to the Funds, after the calculation of the "conversion factor", the following measures shall be adopted:

I - if to the credit of the Funds: "estimated shares" shall be calculated by dividing the readjustment value by the "conversion factor";

II - if to the debit of the Funds: the corresponding "estimated shares" shall be deducted, according to the same operation indicated in the previous item.

CHAPTER II

OF THE TRADING OF INVESTMENT CERTIFICATES

Art. 9. Investment Certificates relating to FINOR, FINAM, FISET, and FUNRES may only be traded on Stock Exchanges.

Sole Paragraph. Brokerage firms executing the operations shall charge a brokerage fee in accordance with the table in force for trading securities issued by public companies.

CHAPTER III

OF SPECIAL AUCTIONS OF SECURITIES

Art. 10. Investment certificates may be converted into securities comprising the portfolios of the Funds through the holding of special auctions.

Paragraph 1. Special auctions for the conversion of investment certificates shall be held periodically on Stock Exchanges, upon request of the operating banks and with prior communication to the Securities and Exchange Commission.

Paragraph 2. When holding the auctions, the norms established by the Stock Exchanges regarding the bidding of standard lots and forms of trading shall be observed, insofar as applicable.

Paragraph 3. For the intermediation of conversion operations, brokerage firms shall charge a brokerage fee, in accordance with the table in force for trading securities issued by public companies.

Art. 11. The auctions shall be preceded by notices, which must be disseminated by the Stock Exchanges 15 (fifteen) days in advance of the date of their holding.

Paragraph 1. The notice shall contain, at least, the following information:

a) the quantity of securities to be auctioned, by issuing company, indicating the nominal value, if any, type, advantages, preferences, limitations, or eventual restrictions attributable to them, and the minimum price for conversion, if any;

b) in the case of titles originating from forestry enterprises, the name of the operating company, the location of the project, the type of crop, and its respective duration of existence shall also be indicated.

Paragraph 2. In the event that no trading has occurred on the exchange in the last five sessions preceding the date of dissemination of the notice or previous auction bidding for the securities of a specific beneficiary company, the minimum price at which the securities comprising the portfolios of the Funds will be placed up for auction shall be fixed by the respective operating banks.

Paragraph 3. If no previous auction bidding has occurred for the securities of a specific beneficiary company, the operating banks may, at their discretion, choose not to fix the minimum value of part or all of the securities to be auctioned.

Art. 12. The value of the share to which the investment certificates to be converted in the special auctions correspond shall be the book value calculated on the day immediately preceding the holding of the auction, fixed by the operating banks in accordance with Article 3 of this Regulation.

Art. 13. Operating banks may only place up for auction the securities, comprising the portfolios of the Funds, that are already fully paid.

Art. 14. Only securities issued by beneficiary companies of resources originating from tax incentives that maintain their registration updated with the CVM may be placed up for auction.

Art. 15. The settlement of operations for the conversion of investment certificates shall be effected through the Stock Exchange where the auction is held, according to the norms and procedures established in common agreement with the operating banks.

CHAPTER IV

OF THE DISCLOSURE OF INFORMATION TO STOCK EXCHANGES

Art. 16. Operating banks shall inform, daily, the amount of the net asset value, the value, and the number of shares of the Funds they administer to the Stock Exchanges, which shall promote the dissemination of the respective information.

Art. 17. Within 30 (thirty) days after the closing of each semester, operating banks shall send to the Securities and Exchange Commission and to the Stock Exchanges, which shall give wide dissemination, at least, the following information regarding the investment portfolios of the Funds they operate:

I - a breakdown, by company, of the type and quantity of titles and securities; and

II - their respective average unit acquisition cost and the valuation value on the date of the survey.

Paragraph 1. The information referred to in this article, relating to the position as of June 30 of each year, shall be complemented by the sending of balance sheets and income statements of the Funds.

Paragraph 2. The dissemination established in the "caput" of this article comprises only the publication, in the bulletin or official organ of the stock exchanges, of the information regarding the receipt of the documents listed in items I and II and in Paragraph 1, and it must be clarified that the same are available for consultation by interested parties for a period of at least 90 (ninety) days.

CHAPTER V

OF THE CORPORATE YEAR AND FINANCIAL STATEMENTS

Art. 18. The corporate year of the Funds shall be the period from July 1 of one year to June 30 of the following year.

Art. 19. The Funds shall have accounting records distinct from those of the operating bank.

Art. 20. The financial statements of the Funds are subject to the accounting standards issued by the Securities and Exchange Commission.

Paragraph 1. The financial statements shall be published, within 60 (sixty) days after the closing of the semester or calendar year to which they refer, in newspapers destined for the dissemination of information relating to the Fund.

Paragraph 2. The Chart of Accounts issued by the Securities and Exchange Commission shall contain all norms for the valuation of assets comprising the Fund, as well as for the appropriation of revenues and expenses inherent to the securities.

CHAPTER VI

OF THE INCORPORATION TO THE ASSETS OF THE FUNDS

Art. 21. The residues resulting from the exchange of Investment Certificates for securities in special auctions, or from the application of resources in accordance with Article 18 of Decree-Law No. 1,376/74, with the new wording given by Article 1 of Decree-Law No. 2,304/86, shall be incorporated into the assets of the Funds.

Art. 22. Securities resulting from acquisitions made based on Article 18 of Decree-Law No. 1,376/74, with the new wording given by Article 1 of Decree-Law No. 2,304/86, that exceed the legal limits of application in the modality, shall become part of the portfolios of the Funds.

CHAPTER VII

OF THE RECEIPT OF RIGHTS

Art. 23. While the securities subscribed in accordance with Article 18 of Decree-Law No. 1,376/74, with the new wording given by Article 1 of Decree-Law No. 2,304/86, are in the name of the Fund, it shall be responsible for receiving the dividends and bonuses that are attributed.

Paragraph 1. The dividends and bonuses referred to in this article shall be delivered to the investors, together with the securities destined to them, in the manner provided for in this Regulation.

Paragraph 2. In the event of the difference referred to in Article 22, the dividends and bonuses relating to the same shall be incorporated into the Funds.

CHAPTER VIII

OF THE DEADLINE FOR TRANSFERS,
SPLITTING, AND DELIVERY OF NEW TITLES

Art. 24. The issuers of securities or Forestry Participation Certificates shall, within 60 (sixty) days from the date of the request made by the operating bank, arrange, in the appropriate books, the transfers, splitting, and delivery of new titles, without charging any fees or expenses, when dealing with caution receipts or certificates issued in the name of the Fund.

CHAPTER IX

OF FINAL PROVISIONS

Art. 25. In the case of conversion of Investment Certificates into Forestry Participation Certificates, the investor shall sign, as soon as requested, an adherence term to the partnership agreement concluded between the administrator of the company and the Fund.