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• CVMs 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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• CVMs OBJECTIVES
• Emphasis 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 Initiatives
• Reform of the Law of Corporations and CVMs Law
• New Regulations
• Recommendations on Corporate Governance

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• Reform 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 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 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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• Reform of CVMs Law
• Main innovations
• Increased CVMs administrative independence
• Commissioners have a 5-years term in office
• Enhancement of CVMs regulatory and oversight
  powers

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• Reform of CVMs Law
• Main innovations
• Redefinition of CVMs 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 CVMs Law
• Definition of conducts as criminal offenses
• Market manipulation
• Insider Trading
• Illegal exercise of any activities in the
  securities market

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• CVMs 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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• CVMs 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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• CVMs 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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• CVMs 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
• 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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• CVMs 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
• 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 funds
  representatives, or the reasons for abstentions

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• 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
• 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 auditors understanding
  regarding the absence of conflict of interests
  that could impair its independence and
  objectivity

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• 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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