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2. 2 CVM’s OBJECTIVES u to stimulate the creation of savings and their investment in securities; u 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; u to guarantee the efficient and correct operation of stock markets and over ‑ the ‑ counter markets; u 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; u to guarantee public access to information on the securities traded and the corporations issuing them u to guarantee the observance of equitable business practice on the securities market;

3. 3 CVM’s OBJECTIVES  Emphasis on  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

4. 4 ä Recent Initiatives ä Recent Initiatives: v Reform of the Law of Corporations and CVM’s Law; v New Regulations v Recommendations on Corporate Governance

5. 5 ä Reform of the Law of Corporations v Main Changes: u Non-controlling shareholders are granted the right to elect 2 members of the board u Board members elected by non-controlling shareholders have veto powers over the choice of the independent auditor u Strengthened the powers of the fiscal committee members

6. 6 Reform of the Law of Corporations ä Reform of the Law of Corporations v Main Changes : u Restoration of tag-along rights in the event of a sale of corporate control u Mandatory offer at ‘fair value’ in delisting or whenever acquisitions by controlling shareholders impact on liquidity u Arbitration clauses permitted in the by-laws of corporations

7. 7 ä Reform of the Law of Corporations v Main Changes: u 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.

8. 8 ä Reform of CVM’s Law v Main innovations: u Increased CVM’s administrative independence u Commissioners have a 5-years term in office u Enhancement of CVM’s regulatory and oversight powers

9. 9 ä Reform of CVM’s Law v Main innovations: u Redefinition of CVM’s enforcement procedures: l Secret investigation period; l Documents and decisions made public, unless secrecy is essential; l Priority for the investigation of serious offenses.

10. 10 ä Reform of CVM’s Law v Definition of conducts as criminal offenses: u Market manipulation u Insider Trading u Illegal exercise of any activities in the securities market

11. 11 ä CVM’s New Regulations: v Instruction 358: disclosure of material information u Disclosure must be made in a comprehensive fashion u Timely disclosure must occur before the opening or after the closing of national or foreign markets

12. 12 ä CVM’s New Regulations: v Instruction 358: disclosure of material information u Clear attribution of responsibilities regarding disclosure - appointment, in the by-laws, of one corporate officer (DRI) responsible for disclosing material information u 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

13. 13 ä CVM’s New Regulations: v Instruction 358 u 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

14. 14 ä CVM’s New Regulations: v Instruction 358 u Limitations on trading imposed to: l Former managers, during 6 months after termination of relationship with the corporation l All insiders, whenever a corporate reorganization is under consideration; l During 15 days prior to disclosure of quarterly of annual financial statements

15. 15 ä New CVM Regulations: v Instruction 358 u Disclosure Policy l Public corporations are obliged to adopt a written disclosure policy, outlining what procedures are established in order to maintain confidentiality of undisclosed material information

16. 16 ä CVM’s New Regulations: v Instruction 361: regulates the procedures to be observed in the following mandatory or tender offers : l Voluntary acquisitions l Mandatory offer in delisting l Acquisitions by the controlling shareholder l Acquisition of minority shareholders’ shares in the event of a sale of corporate control

17. 17 ä New CVM Regulations: v Instruction 377: mutual funds u Adoption of a policy regarding the exercise of voting rights in shareholders’ meetings of corporations at which the fund holds interest u 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;

18. 18 ä Proposed Regulation: u Stock Option Plans l 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,

19. 19 ä Proposed Regulation: u Independent Auditors: l 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

20. 20 ä Further Actions: New Bill under Discussion v Bill # 3.741 - Financial Statements u Creation of an independent body responsible for setting out accounting principles and rules u Alignment with best international accounting practices

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