Resolution No. 1,199

RESOLUTION NO. 001199 ------------------- THE CENTRAL BANK OF BRAZIL, in the form of art. 9 of Law no. 4,595, of 31.12.64, makes public that the President of the NATIONAL MONETARY COUNCIL, by act of 09.10.86, based on art. 1, Paragraph 2, of Decree no. 83,323, of 11.04.79, with the wording given to it by art. 1 of Decree no. 85,776, of 26.02.81, "ad referendum" of that Council, in view of the provisions of the aforementioned Law, of Law no. 4,728, of 14.07.65, and of Decree-law no. 2,287, of 23.07.86, R E S O L V E D: I - To approve the annexed Regulation, which governs the constitution and operation of Short-Term Investment Funds. II - The Central Bank is authorized to issue the norms and adopt the measures deemed necessary for the execution of the provisions of this Resolution. III - This Resolution shall enter into force on the date of its publication. Brasília-DF, 10 October 1986 Fernão Carlos Botelho Bracher President REGULATION ANNEXED TO RESOLUTION NO. 1,199, OF 10.10.86, WHICH GOVERNS THE CONSTITUTION OF SHORT-TERM INVESTMENT FUNDS. CHAPTER I On the Constitution and Characteristics Art. 1. The Short-Term Investment Fund, constituted in the form of an open condominium, is a communion of resources destined for investment in: a) securities forming part of the portfolio of institutions authorized to carry out repurchase operations, linked to repurchase commitments assumed by them, for settlement within a maximum period of 28 (twenty-eight) days counted from the assumption of the commitments; b) Federal and State Public Debt Securities and Central Bank Bills; c) Bank Deposit Certificates, Bills of Exchange accepted by a credit, financing and investment company, and debentures, duly registered with the Central Custody and Financial Settlement of Securities (CETIP), or maintained in book-entry form; d) other securities or modalities that may be authorized by the Central Bank. Paragraph 1. The Central Bank shall establish the proportion in which said securities may form part of the Fund's portfolio. Paragraph 2. The Fund shall have an indefinite term of duration and its denomination shall include the expression "Short-Term Investment Fund". Art. 2. The constitution of a Short-Term Investment Fund shall depend on prior authorization from the Central Bank. Sole paragraph. The constitution document, which shall be registered with the Registry of Deeds and Documents, shall reproduce the full text of the Fund's Regulation and shall contain the qualification of its founders, among which the institution that will administer it. Art. 3. The Central Bank shall only authorize the constitution of a Short-Term Investment Fund whose initial value is greater than Cz$500,000.00 (five hundred thousand cruzados). CHAPTER II On Administration Art. 4. The Administration of a Short-Term Investment Fund may only be exercised by a commercial bank or investment bank, under the supervision and direct responsibility of a director thereof. Art. 5. The administering
institution shall be prohibited, in the specific exercise of its functions and using the resources of the Short-Term Investment Fund, from: I - granting loans or advances or opening credits, under any modality; II - providing surety, guarantee, acceptance or becoming jointly liable in any other form; III - negotiating with securities other than those referred to in this Resolution or authorized by the Central Bank; IV - investing abroad resources raised in the Country; V - selling Fund quotas in installments; VI - promising predetermined yield to quotaholders; VII - making, in its advertising and in other documents that may be presented to investors, promises of withdrawals or yields, based on its own performance, on the performance of others or on that of capital market securities; VIII - delegating powers to manage and administer the Fund, except with specific authorization from the Central Bank. Sole paragraph. The Central Bank shall establish norms regarding the conditions under which Fund resources may be invested in securities issued, accepted or jointly guaranteed by the administering institution or by companies linked to it. Art. 6. For the purposes of the provisions of this Regulation, a company is considered linked: I - in which the administering institution participates, directly or indirectly, with more than 10% (ten percent) of the capital; II - in which administrators of the administering institution and their respective relatives up to the second degree participate, jointly or individually, with more than 10% (ten percent) of the capital, directly or indirectly; III - in which shareholder(s) with more than 10% (ten percent) of the capital of the administering institution participate(s) with more than 10% (ten percent) of the capital, directly or indirectly; IV - which participates with more than 10% (ten percent) of the capital of the administering institution, directly or indirectly; V - whose administrators and their respective relatives up to the second degree participate, jointly or individually, with more than 10% (ten percent) of the capital of the administering institution, directly or indirectly; VI - whose shareholder(s) with more than 10% (ten percent) of the capital also participate(s) in the capital of the administering institution with 10% (ten percent) or more of its capital, directly or indirectly; VII - whose administrators, in whole or in part, are the same as those of the administering institution, except for positions held in collegiate bodies, provided for in the bylaws or internal rules of the administering institution, provided that their holders do not exercise executive functions, after prior consultation with the Central Bank. Art. 7. The following shall be included among the obligations of the administering institution: I - to maintain, at its own expense, updated and in perfect order, in accordance with good administrative technique, the documentation relating to the operations of the fund, as well as: a)
the register of quotaholders, when applicable; b) the book of minutes of general meetings; c) the attendance book of quotaholders; d) the file of the auditors' opinions; e) specific records of all accounting facts relating to the Fund; II - to bear the expenses of advertising the Fund; III - to disclose, daily, the value of the Fund's net equity, the value of the quota and the profitability earned on the day and accumulated over the last 30 (thirty) days, in the newspaper(s) referred to in items II of art. 18 and V of art. 33. Art. 8. The administering institution may, upon prior notice of 6 (six) months - disclosed in the Official Gazette and in the newspaper(s) referred to in items II of art. 18 and V of art. 33 - or by means of a letter or telegram addressed to each quotaholder, when applicable, resign from the administration of the Short-Term Investment Fund, and shall be obliged, in the same act, to convene a general meeting that shall decide on the replacement of the administering institution or liquidation of the Fund, observing the provisions of art. 25. Paragraph 1. The term referred to in this article may be reduced, provided there is express consent from the Central Bank. Paragraph 2. In the cases of replacement of the administering institution and liquidation of the Fund, the rules in force on civil or criminal liability of administrators of financial institutions shall apply, as applicable, regardless of those governing the civil liability of the administering institution itself. Art. 9. The administering institution shall stipulate, at its discretion, remuneration to be received for the provision of management and administration services of the Short-Term Investment Fund, and the Central Bank may establish rules in this regard. CHAPTER III On the Diversification of Investments Art. 10. The total investments of the Short-Term Investment Fund in securities of a single issuer or acceptor shall not exceed 10% (ten percent) of its total investments, excepted from this percentage the Federal Public Debt Securities, the Central Bank Bills and, observing the provisions of the Central Bank, in accordance with the sole paragraph of art. 5, the securities issued, accepted or guaranteed by the administering institution or companies linked to it. Art. 11. Non-compliance with the diversification limit of investments must be justified before the Central Bank, which may determine that the administering institution convene a general meeting of quotaholders to decide on one of the following alternatives: I - transfer of the administration of the Fund to another institution; II - liquidation of the Fund. CHAPTER IV On the Issuance, Placement and Redemption of Quotas Art. 12. The quotas of the Short-Term Investment Fund shall correspond to ideal fractions thereof and shall take the form(s) of registered, endorsable and/or bearer. Paragraph 1. The quotas may be represented by an Investment Certificate or held in deposit accounts in the name of their
holders, as provided in the Fund's regulation. Paragraph 2. The status of quotaholder is presumed: a) in the case of registered quotas, by the inscription of the quotaholder's name in the "Register of Quotaholders" book, or by registration in the deposit account of the quotas, opened in the name of the quotaholder in the books of the depositary institution, if book-entry; b) in the case of endorsable quotas, by possession of the Investment Certificate based on a regular series of endorsements; c) in the case of bearer quotas, by possession of the Investment Certificate. Paragraph 3. The rules governing the transfer of shares, in the form of Law No. 6.404 of 15.12.76, shall apply subsidiarily, as applicable, to the transfer of the Investment Certificate. Art. 13. The Investment Certificate, as well as the statement of the deposit account, shall contain: I - the following characteristics of the administering institution: a) the name and location of the head office; b) reference to the authorization of the Central Bank (number of the charter and date of its publication in the Official Gazette); c) the registration number in the General Taxpayers' Register of the Ministry of Finance; II - the name of the quotaholder or quotaholders, jointly or severally, when applicable; III - the serial number; IV - the number of quotas represented by it; V - the date of issuance; VI - authorized signature of the administering institution, mechanical stamping being permitted in the case of issuance of an Investment Certificate. Art. 14. The Investment Certificate, as well as the statement of the deposit account, shall prove the obligation of the administering institution to comply with the contractual prescriptions contained in the regulation of the Condominium and the rules of this Regulation. Sole paragraph. Any clause restricting or modifying the obligation referred to in this article shall be deemed not written. Art. 15. The Investment Certificate, as well as the statement of the deposit account, shall refer to an integer and/or fractional number of quotas, according to the records of the Short-Term Investment Fund. Sole paragraph. When the system of whole quotas is adopted, the residual value of the investments shall be kept in a current account for future investments or, if requested, shall be returned to the quotaholder in current currency. Art. 16. The quotas of the Short-Term Investment Fund may only be placed by: I - commercial bank; II - investment bank; III - securities brokerage firm; and IV - securities distribution firm. Art. 17. In the note provided to the investor at the time of the sale of the quotas, the amount of the resources delivered to the administering institution must be expressly stated, specifying whether they are represented by checks, payment order, deposit receipt in favor of the administering institution, credit order document, or in cash. Art. 18. The administering institution must make available to the investor, free of charge, at
the time of their entry as a quotaholder of the Short-Term Investment Fund, the following: I - a copy of the Fund's regulation; II - indication of the newspaper(s) used for disclosure of information about the Fund. Art. 19. In the issuance of quotas, the value established for the day of effective availability of the resources entrusted by the investor in favor of the administering institution, at its headquarters or branches, shall be used. Art. 20. The value of the quota shall be calculated daily. Art. 21. The Short-Term Investment Fund shall have no grace period for the purpose of exercising the quotaholder's right to redeem quotas, observing the provisions of art. 37, "in fine". Art. 22. In the redemption of quotas, the value determined for the day of receipt of the request, at the headquarters or branches of the administering institution, shall be used. Paragraph 1. The redemption request shall be made by presenting the quota sale note accompanied by the Investment Certificate or the statement of the corresponding deposit account. Paragraph 2. The redemption shall be made in cash, check, payment order or credit order document, at the headquarters or branches of the administering institution, in the manner to be established by the Central Bank. Art. 23. The following expenses shall constitute charges of the Short-Term Investment Fund, in addition to the remuneration for services referred to in art. 9, when applicable, which may be debited to it by the administering institution: I - federal, state, municipal or autarchic fees, taxes or contributions, which fall or may fall on the assets, rights and obligations of the Fund; II - expenses with printing, dispatch and publication of reports, forms and periodic information, provided for in the Fund's regulation or in the pertinent regulation; III - expenses with correspondence of interest to the Fund, including communications to quotaholders; IV - fees and expenses of the auditors in charge of reviewing the balance sheet and accounts of the Fund and analyzing its situation and the performance of the administering institution; V - emoluments and commissions paid on the Fund's operations; VI - lawyers' fees, costs and related expenses incurred in defense of the Fund's interests, in or out of court, including the amount of the judgment, should the Fund be unsuccessful; VII - eventual losses related to the portion in which such events are not covered by insurance policies and cannot be directly attributed to the fault or negligence of the administering institution; VIII - insurance premiums on securities, as well as any expenses related to the transfer of Fund resources between banks; IX - any expenses inherent to the constitution or liquidation of the Fund or to the holding of a general meeting of quotaholders; X - custody fees for the Fund's securities. Sole paragraph. Any expenses not provided for as charges of the Fund shall be borne by the administering institution. CHAPTER V Of the General Meeting
Art. 24. It shall be the exclusive competence of the general meeting of quotaholders: I - to annually approve the accounts of the Fund, prepared by the administering institution, and deliberate on its financial statements; II - to amend the Fund's regulation, allowing the process of deliberation by consultation, when applicable, by letter or telegram sent by the administering institution to each quotaholder, also requiring its publication in the Official Gazette and in the newspaper(s) referred to in items II of art. 18 and V of art. 33, for response within 30 (thirty) days; III - to deliberate on the ordinary liquidation of the Fund, also allowing the process of deliberation by consultation, when applicable, in the manner mentioned in the previous item; IV - to deliberate on the replacement of the administering institution; V - to deliberate on the merger and incorporation of the Fund. Sole paragraph. The Fund's regulation may be amended independently of a general meeting or consultation with quotaholders, whenever such amendment arises exclusively from the need to comply with requirements of the Central Bank, as a consequence of legal or regulatory norms, and the necessary communication to quotaholders must be arranged within 30 (thirty) days, when applicable, or the respective disclosure, in the newspapers referred to in items II of art. 18 and V of art. 33. Art. 25. The convening of the general meeting shall be made by announcement published in the Official Gazette and in the newspaper(s) referred to in items II of art. 18 and V of art. 33. Paragraph 1. The convening announcements shall obligatorily contain the day, time and place where the meeting will be held and, even if succinctly, the matters to be addressed. Paragraph 2. The first convening of the general meeting shall be made at least 8 (eight) days in advance, counting from the date of publication of the first announcement; in the cases of items III, IV and V of art. 24, if a second convening is necessary, it shall be made at least 5 (five) days in advance. Art. 26. In addition to the annual accountability meeting, the general meeting may also meet to address the matters referred to in items III, IV and V of art. 24, upon convening by the administering institution or by quotaholders holding quotas representing at least 30% (thirty percent) of the total quotas issued. Art. 27. At the general meeting of quotaholders, which may be installed with any number, resolutions shall be taken by the criterion of absolute majority of quotas of quotaholders present, with each quota corresponding to one vote. Paragraph 1. In cases of use of the consultation process referred to in items II and III of art. 24, with precise specification of the matter, as well as in resolutions taken at a general meeting in the cases of items III, IV and V of the same article, the absolute majority shall be computed in relation to the total quotas issued. Paragraph 2. Resolutions shall be taken by majority of quotas of
quotaholders present at the meeting, even in the cases of items III, IV and V of art. 24, when the "quorum" of absolute majority of quotas issued is not reached at a conclave held on first call. Paragraph 3. When the consultation process is used, the absence of a response shall be considered as consent on the part of the quotaholder, provided that such interpretation is expressly authorized by the Fund's regulation and stated in the consultation itself. Paragraph 4. Only quotaholders who appear in the "Register of Quotaholders", where applicable, or in the proper book, 3 (three) days before the date set for the meeting may vote at the general meeting. Art. 28. The legal representatives of the quotaholders or their duly constituted attorneys-in-fact are qualified to attend the general meeting. CHAPTER VI Of the Financial Statements Art. 29. The Short-Term Investment Fund shall have accounting records kept separately from those of the administering institution. Art. 30. The financial statements of the Short-Term Investment Fund shall be subject to the accounting rules issued by the National Monetary Council and the Central Bank. Sole paragraph. The Chart of Accounts issued by the Central Bank shall contain all the rules for valuation of the securities linked to the Fund's operations, observing the provisions of art. 39. CHAPTER VII Of Publicity and Remittance of Documents Art. 31. The administering institution of the Short-Term Investment Fund shall be obliged to disclose, widely and immediately, any relevant act or fact pertaining to it, so as to guarantee all quotaholders access to information that may, directly or indirectly, influence their decisions regarding remaining in the Fund. Paragraph 1. The disclosure of the information referred to in this article shall be made through publication in the Newspaper(s) referred to in items II of art. 18 and V of art. 33. Paragraph 2. The administering institution shall make the publications provided for in this Regulation always in the same newspaper(s) and any change shall be preceded by notice to the quotaholders. Art. 32. The administering institution shall, within a maximum period of 10 (ten) days after the end of each month, make available to the quotaholders, at its head office and branches, the information referred to in items II and III of art. 33, based on data relating to the last day of the month to which they refer. Art. 33. The administering institution shall, where applicable, send to each quotaholder, semi-annually, based on data relating to the last day of the months of June and December, a document containing the following information regarding the Short-Term Investment Fund: I - number of quotas held and their value, where applicable; II - profitability obtained; III - amount of the Fund's investments, detailing the respective securities (quantity, type and percentage of the total); IV - balance sheets and other financial statements, accompanied by the independent auditor's report; V -
indication of the newspaper(s) used for disclosure of information. Paragraph 1. The remittance referred to in this article shall not be mandatory to quotaholders: I - holding quotas whose total value is less than 10 (ten) National Treasury Obligations (OTN); or II - whose last remittance of information was returned due to incorrectness in the declared address, who have not proceeded to update it. Paragraph 2. The communications provided for in this article shall be sent within a maximum period of 60 (sixty) days after the end of the semester to which they refer. Paragraph 3. In the case of a Fund with bearer quotas, the administering institution shall, within the period established in the previous paragraph, make available to the quotaholders, at its head office and branches, the information referred to in items II to IV of this article. Art. 34. The administering institution shall send to the Central Bank, within a maximum period of 10 (ten) days after the end of the period to which they refer, without prejudice to others that may be required, the following documents relating to the Short-Term Investment Fund: I - monthly: a) trial balance; b) statement of composition and diversification of investments; c) statement of sources and applications of funds; II - semi-annually: a) balance sheet; b) copies of the information provided to the quotaholders; c) list of judicial or extrajudicial claims, whether in defense of the rights of the quotaholders or of those against the Fund's administration, indicating the date of their initiation and the final solution. CHAPTER VIII Of the General Rules Art. 35. The Short-Term Investment Fund shall be audited semi-annually by an independent auditor registered with the Securities and Exchange Commission. Art. 36. The following acts relating to the Short-Term Investment Fund shall be subject to prior approval by the Central Bank: I - constitution; II - amendment of the regulation; III - replacement of the administering institution; IV - merger; V - incorporation; VI - liquidation. Art. 37. The Central Bank may change the limit referred to in art. 10, the form of provision and disclosure of the information provided for in this Regulation, as well as establish periods - of grace and intermediaries - for the purpose of exercising the right of redemption of quotas by the quotaholder. Art. 38. Failure to comply with the rules set forth in this Regulation shall subject the offending administering institution to the penalties provided for in art. 44 of Law no. 4.595, of 31.12.64. CHAPTER IX Transitional Provisions Art. 39. Until the Chart of Accounts referred to in the sole paragraph of art. 30 is issued, the provisions contained in the Accounting Plan for Mutual Investment Funds (COMIN) shall apply, where applicable, to the Short-Term Investment Fund.