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CVM’s OBJECTIVESCVM’s OBJECTIVES

to stimulate the creation of savings and their investment in securities; to promote the expansion and regular and efficient operation of the

stock market, and stimulate permanent investments in the capital stock of publicly held corporations;

to guarantee the efficient and correct operation of stock markets and over‑the‑counter markets;

to avoid or prevent any kind of fraud or manipulation intended to create artificial conditions of supply, demand or price of the securities traded on the market;

to guarantee public access to information on the securities traded and the corporations issuing them

to  guarantee the observance of equitable business practice on the securities market;

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CVM’s OBJECTIVESCVM’s OBJECTIVES EmphasisEmphasis on on:

• Increasing the level of protection of investors against illegal practices of corporate managers and controlling shareholders

• Enhancing transparency in the management of public corporations

• Improving its ability to regulate and oversee the market

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Recent InitiativesRecent Initiatives:

Reform of the Law of Corporations and CVM’s Law;

New Regulations

Recommendations on Corporate Governance

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Reform of the Law of CorporationsReform of the Law of Corporations

Main Changes: Non-controlling shareholders are granted the

right to elect 2 members of the board

Board members elected by non-controlling shareholders have veto powers over the choice of the independent auditor

Strengthened the powers of the fiscal committee members

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Reform of the Law of CorporationsReform of the Law of Corporations

Main Changes:

Restoration of tag-along rights in the event of a sale of corporate control

Mandatory offer at ‘fair value’ in delisting or whenever acquisitions by controlling shareholders impact on liquidity

Arbitration clauses permitted in the by-laws of corporations

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Reform of the Law of CorporationsReform of the Law of Corporations Main Changes:

CVM has the authority to:• request up to a 30-day call in advance if the meeting

relates to complex transactions• suspend, by up to 15 days, the term for call of the

shareholdersrs’ meeting in order to (...) analyze the proposals to be submitted to the meeting and, if applicable, inform the corporation why the Commission understands that a resolution proposed at the meeting violates legal or regulatory provisions.

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ReformReform of of CVMCVM’s Law’s Law

Main innovations:

Increased CVM’s administrative independence

Commissioners have a 5-years term in office

Enhancement of CVM’s regulatory and oversight powers

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ReformReform of of CVMCVM’s Law’s Law

Main innovations:

Redefinition of CVM’s enforcement procedures:

Secret investigation period;

Documents and decisions made public, unless secrecy is essential;

Priority for the investigation of serious offenses.

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Reform of CVM’s LawReform of CVM’s Law

Definition of conducts as criminal offenses: Market manipulation Insider Trading Illegal exercise of any activities in the

securities market

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CVM’s New RegulationsCVM’s New Regulations::

Instruction 358: disclosure of material information

Disclosure must be made in a comprehensive fashion

Timely disclosure must occur before the opening or after the closing of national or foreign markets

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CVM’s New RegulationsCVM’s New Regulations::

Instruction 358: disclosure of material information

Clear attribution of responsibilities regarding disclosure - appointment, in the by-laws, of one corporate officer (DRI) responsible for disclosing material information

The obligation to disclose material information is extended to owners, officers and directors, in such case where they are asked to do so by the DRI, or should he/she fail to disclose such information

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CVM’s New Regulations:CVM’s New Regulations:

Instruction 358

Trading by Corporate Managers

• Trading by corporate managers must be informed to CVM and to the stock exchanges. Obligation to divulge trades by members of the fiscal committee and any other committees created by the corporation

• Any trades involving 5% of a class of shares

issued by the corporation must be also reported

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CVM’s New Regulations:CVM’s New Regulations:

Instruction 358

Limitations on trading imposed to: Former managers, during 6 months after

termination of relationship with the corporation All insiders, whenever a corporate reorganization

is under consideration; During 15 days prior to disclosure of quarterly of

annual financial statements

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New CVM Regulations:New CVM Regulations:

Instruction 358

Disclosure Policy Public corporations are obliged to adopt a written

disclosure policy, outlining what procedures are

established in order to maintain confidentiality of

undisclosed material information

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CVMCVM’s ’s New Regulations:New Regulations:

Instruction 361: regulates the procedures to be observed in the following mandatory or tender offers :

Voluntary acquisitions

Mandatory offer in delisting

Acquisitions by the controlling shareholder

Acquisition of minority shareholders’ shares in the event of a sale of corporate control

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New CVM Regulations:New CVM Regulations:

Instruction 377: mutual funds

Adoption of a policy regarding the exercise of voting rights in shareholders’ meetings of corporations at which the fund holds interest

Disclosure, in the semestral report, of the contents of deliberations voted for or against in shareholders’ meetings attended by the fund’s representatives, or the reasons for abstentions;

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Proposed Regulation: Proposed Regulation:

Stock Option Plans

Proposed regulation covering disclosure of information regarding the implementation and maintenance of stock option plans including managers or employees of the corporations or its affiliates,

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Proposed Regulation:Proposed Regulation:

Independent Auditors: New rules, complementary to regulation already in

place, proposing that corporations divulge in formations concerning:

I – the nature of the services provided by the independent auditor, and the date on which such services were hired ;

II – the total amount paid to the independent auditor with respect to auditing and other services

III – the independent auditor’s understanding regarding the absence of conflict of interests that could impair its independence and objectivity

2020

Further Actions:Further Actions:

New Bill under Discussion

Bill # 3.741 - Financial Statements

Creation of an independent body responsible for setting out accounting principles and rules

Alignment with best international accounting practices

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