The Brazilian Securities and Exchange Commission (“CVM”) edited the CVM Resolution No. 848, of March 25^th, 2020, (“CVM Resolution 848”) and postponed the regulatory deadlines.

It is important to highlight that the deadline fixed in Law, as, for instance, for the financial statements’ drafting and disclosure, and for the realization of the public trade corporations’ General Meetings, governed by Law No. 6.404/1976, cannot be and are not modified by the CVM Resolution 848.

Among the modifications of deadlines, the following stand out:

I. Suspension of procedural deadlines;

II. Postponing of the liabilities’ expiration date undertaken by Commitment Terms, and of the inspection rates’ instalments, of the fines applied in Administrative Enquiry, and of the punitive fines;

III. Suspension of the issuance of launching notices, except in the cases subject to tax credit’s peremption or limitation of action;

IV. Minimum break’s suspension for the realization of two public offerings;

V. Suspension of the liability to file corporate acts that authorize the issuance of borrowers’ notes at the competent board of trade, in order to submit to CVM;

VI. Postponing of the coming into force of the SC Resolution No. 617/2019, of December 5^th, 2019, regarding the money laundering and terrorism financing Prevention – MLTFP, except articles 27 and 28, which are in force since their publication;

VII. Postponing of the financial statements’ sending audited from the investment funds governed by the SC and from the separate assets of the Real State Receivable Certificates (Certificados de Recebíveis Imobiliários – “CRI”) and from the Agribusiness (Certificados de Recebíveis do Agronegócio – “CRA”) issued by security companies registered under the CVM, and

VIII. Postponing of the marker share participants’ other liabilities, concerned to the registration, financial statements, General Meetings, notices and reports to the CVM, among others.

Check all the modified deadlines here.

In addition to the CVM Resolution 848 and attending the market participants’ questions, the Institutional Investors’ Relationship Superintendence (Superintendência de Relações com Investidores Institucionais – “SIN”) published the Circular Letter CVM SIN 06/20 (“Circular Letter”), on March 26^th, 2020, and presented its clarifications to the markets regarding the following subjects:

I. Portfolio non-compliance

SIN expressed its understanding of not having justified reasons for the adoption of punitive measures by CVM in the cases of passive non-compliance of the Investment Funds’ portfolios unleashed by circumstances in which the continuity of the unpredictability and the relevance of changes in the capital market’s general conditions make it impossible to comply with the regulatory deadline foreseen for the reframing. These circumstances are described in the article 105 of the CVM Instruction No. 555, of December 17^th, 2014 (“ICVM 555”).

The technical area recognized that the reframing of the Investment Fund’s portfolio may depends on other factors, as the liquidity’s character and structure of portfolio assets, beyond the term for which lasts the exceptionality concerned to the COVID-19 pandemic. Nonetheless, SIN warned that these circumstances are not excuses to investment decisions that deepen the fund’s non-compliance situation.

In the analysis of the concrete case and in the notice framework system provided in the article 105 of the ICVM 555, SIN will evaluate whether the measures taken by the manager and the administrator were compatible with the requirements by the circumstances and by their fiduciary and diligence duties.

At last, SIN clarified that the understanding above will also be applied to other kinds of investment funds, in the case of the portfolio’s potential non-compliance.

We remember that the regulatory deadlines set forth in the article 105 of the ICVM 555 for the portfolio’s reframing and its notice to the CVM have been doubled by the CVM Resolution 848.

II. Temporary replacement of the opening quotas to closing quotas’ calculation on investment funds ruled by the ICVM 555

Due to the high volatility of the markets nowadays and the operating difficulties to the maintenance of the opening quotas’ calculation to the structured funds to daily applications and redemptions, SIN allowed the substitution of such calculation by the conventional systematic of investments payments and redemptions according to the closing quotas. For this, it is essential that the fund publishes material facts taking into account such systematic.

Stands out that mentioned permission is exceptional and will remain valid during the period in which the most acute moment of the contingencies associated with the adverse, extreme and unpredictable market scenario elapses.

III. Investments Funds’ General Meetings in the context of the COVID-19 pandemic

Taking into account the Ministry of Health and World Health Organization recommendations and in the light of the public interest, SIN expressed in favor of the cancellation or of General Meetings’ postponing, summoned or not, in the cases which it is not possible to accomplish in remotely, virtually or by means of formal consultation, as long as observing the new deadlines established by the CVM Resolution 848.

SIN reiterated that this understanding is applicable to the security companies and fiduciary agents of CRI and CRA.

IV. Documents exchanging between service providers

CVM technical area clarified that, in the investment funds framework, there is not a rule setting the specific format to the remittance of information or documents, and, therefore, it is not mandatory the physical sending or the requirement of presence or physical contact, direct or indirect, between people.

V. Provisioning of credit rights in Creditory Rights Investment Funds (Fundos de Investimento em Direitos Creditórios – “FIDC”)

Regarding the questions about the accounting of the credit rights maintained in FIDC’s portfolios, SIN expressed understanding that the exigence imposed by the CVM Instruction No. 489 of January 14^th, 2011 (“ICVM 489”), refers to the duty of provisioning in the case of a change in the expected losses’ perspective of the asset. In this way, the mere event of delay or renegotiation of the payment terms of a credit right is not enough to the constitution of the provision.

However, SIN highlighted that, in the case that the facts and conditions indicate a significant deterioration in the capacity of credits’ recovering and, consequently, a new credit risk associated to the asset, the manager has the duty to execute the provision in accordance with ICVM 489.

Check all the modified deadlines here.

Access the CVM Resolution 848 here.

Access the Circular Letter CVM SIN 06/20 here.