Hedge Fund Regulation in Brazil - Part 1(b)

6.4. Quota Subscription or Acquisition

All quotaholders when enter in the fund shall attest, before an own written term that he has: (a) received the regulations and, if it is the case, the brochure; (b) acknowledged the risk involved and the investment policy; and (c) acknowledged the possibility of occurrence of negative net equity, if that is the case, and in this case of his responsibilities for a further input of additional resources. The administrator shall make available to CVM the term that contains such declarations, duly signed by the investor, or registered in the electronic system. The regulation and, if it is the case, the brochure shall be delivered by the administrator in its current and updated versions.

The administrator shall inform the date of the first payment of the quotas of the fund through the Document Sending System available in the CVM webpage within a term of two business days.

Without harm to eventual sanctions, CVM shall suspend the issuance, subscription and distribution of quotas of the fund made in disagreement with the rules outlined herein.

The investment fund may contract, in writing, intermediate institutions that are part of the securities distribution system to distribute the quotas, and authorize them to conduct the subscription of the quotas for the account and order for its respective clients. For the adoption of the procedure herein, the administrator and the intermediary institution shall establish, in writing, the obligation of the latter in creating a complementary registration of quotaholders that is specific for each fund in which such modality of subscription of quotas might occur, in such a way that:

the intermediary institution inscribe in the quotaholders complimentary registration the title holder of the quotas in the name of the investors, attributing to each quotaholder a client code and informing such code to the fund's administrator; and the hired, administrator or institution, keeps account of the quotas in a special way in the fund's quotaholders registration, adopting, in the identification of the title holder, the name of the intermediary institution, added by the client's code supplied by the intermediary institution and that identifies the complimentary quotaholder. The applications or redemptions done in the investment funds by means of intermediary institutions that act on behalf of the clients shall be done in a segregated form, in a way that the goods and rights part of the...