CVM Rules

The Brazilian securities market is regulated by the Securities and Exchange Commission of Brazil CVM, which has the authority to supervise and issue general rules regarding the operation and administration of stock exchanges and financial institutions registered with the CVM and players in the Brazilian securities market, as well as by the National Monetary Council (CMN) and the Central Bank of Brazil (BACEN). The CVM has powers that include, but are not limited to, authorizing the incorporation and operation of brokerage firms and regulating foreign investments and foreign exchange transactions.

The Brazilian securities market is governed by the Brazilian Securities Markets Law, by the Brazilian Corporations Law and by the regulations issued by the CVM, CMN and BACEN. These laws and regulations provide for, among other things, information disclosure requirements, restrictions on insider trading and price manipulation, and the protection of non-controlling shareholders.

Under Brazilian Corporations Law, a corporation is considered publicly held when its securities are listed for trade in the Brazilian securities market and closely held when its securities are not publicly traded in the Brazilian securities market. All Publicly Held Companies must register with the CVM and are subject to information disclosure and other regulatory requirements.

A Company registered with the CVM may trade its securities either on the Brazilian stock exchange (BM&FBOVESPA) or on the Brazilian over-the-counter market. To list its stock, a company must apply for registration at the BM&FBOVESPA  and at the CVM. The stocks of companies listed on the BM&FBOVESPA  may not be traded simultaneously on the Brazilian over-the-counter market. The stocks of a company listed on the BM&FBOVESPA may also be traded privately, subject to various limitations.

The Brazilian over-the-counter market, both organized and unorganized, consists of trades between investors through a financial institution registered with the CVM and authorized to trade in the Brazilian capital markets. No special application, other than registration with the CVM, is required for the securities of a Publicly Traded Company to be traded in the unorganized over-the-counter market. CVM must be informed of all trades carried out in the Brazilian over-the-counter market by the respective intermediaries.

The trading of securities on the BM&FBOVESPA  may be suspended upon the request of the issuing company prior to the publication of a material fact notice. Trading may also be suspended upon the initiative of the BM&FBOVESPA  or the CVM based on or due to, among other reasons, indications that a company has provided inadequate information regarding a material fact or has provided inadequate responses to inquiries by either of these agencies.