TERMS AND CONDITIONS FOR THE Brazilian Structured Note COE (CERTIFICADOS DE OPERAÇÕES ESTRUTURADAS COE )

Transcription

1 TERMS AND CONDITIONS FOR THE Brazilian Structured Note COE (CERTIFICADOS DE OPERAÇÕES ESTRUTURADAS COE ) By this instrument, the Haitong Banco de Investimento do Brasil S/A ( Issuer ), hereby informs of the General Terms and Conditions for the COE - in order to allow the comprehensive understanding of the conditions, payment flows and the risks involved in the Notes as provided below: CHAPTER I DEFINITION AND PURPOSE 1.1. The COE is a flexible instrument that combines Fixed Income and Variable Income elements, and is structured based on gains and losses outcomes selected according to the profile of each investor. Created by Law 12,249/10 of June 11, 2010, regulated by Resolution No. 4,263 of the National Monetary Council ( Resolution 4,263/13 ) and Instruction No. 569 of the Brazilian Securities and Exchange Commission (CVM 539/15), as amended It is a funding instrument issued against an initial investment ( Initial Investment ), representative of a single and indivisible set of rights and obligations, based on pre-established gains and losses outcomes, with a profitability structure that has characteristics of derivative financial instruments The COE must be issued exclusively, in book-entry form, and registered by the Issuer at CETIP S/A Mercados Organizados ( CETIP ) and/or BM&FBOVESPA S/A Bolsa de Valores, Mercadorias e Futuros ( BM&FBOVESPA ), as applicable, referred to as Platform Regarding the registration mentioned above, by way of acquisition of any COE, the Investor automatically and expressly complies with its terms, conditions, provisions, calculation methodologies and forms of settlement established by the Platform, given that such provisions are applicable alternatively to these General Terms and Conditions in relation to the registered COE The place of issue of the COE will be deemed, for all purposes, as the City of São Paulo, State of Sao Paulo. CHAPTER II DISTRIBUTION 2.1. The COE can be offered by the Issuer and/or the Intermediary Institution exclusively to Investors who meet the Investment Adequacy Policy The distribution of COE can be done through intermediary institutions ( Intermediary Institution ), duly qualified to act as members of the securities distribution system in accordance with the current legislation, by resale or any other form agreed with the Issuer. 1

2 When the distribution is done through resale, the Intermediary Institution (i) shall be considered as an Investor to the Issuer for all purposes of these Terms and Conditions, and (ii) it may not, in the first resale, resell the COE at a premium in relation the COE s Par Value The Intermediary Institution to celebrate the Operating Agreement for the distribution of bonds and securities ( Operating Agreement ) with the Issuer will be responsible for the following: (i) (ii) (iii) the adequacy (Suitability) of Clients for which the COE will be distributed, observing the Investment Adequacy Policy prepared by the Intermediary Institution, and that will guide the Clients on any procedures and limitations related to the acquisition and maintenance of the COE; maintaining, during the term of the Operating Agreement, determined by regulations and/or applicable law, all Clients registration updated, and complying with all legal and regulatory requirements relating to its relationship with Clients; maintaining full control over the distribution of the COE, including the list of Clients who have purchased the COE; (iv) observing and complying, at all times, to the provisions of the CVM 539/15, of Resolution 4,263/13 and all other applicable regulations; (v) (vi) (vii) (viii) (ix) (x) ensuring that the marketing or the advertising material is within the specifications and legal and regulatory determinations and that (i) all information of the marketing or the advertising material is true, complete, consistent, and does not lead the investor to error, and (ii) the language used in these materials shall be simple, clear, objective, concise and appropriate to the nature and complexity of the product; maintaining the Issuer s indemnified position with regard to any loss related to false or inaccurate statements, or in any way of non-compliance, by the Investor, to the agreed items in the General Terms and Conditions, the Confirmation, the Essential Information Document ( DIE ) and the Binding and Risk Agreement as applicable; the acquisition of the COE, as the initial acquirer, the Intermediary Institution will not be based on any information received in writing or verbally from the Issuer, based only on the information that is contained in the DIE, the Confirmation and the General Terms and Conditions; to deliver the DIE to its Clients before the acquisition of the COE, either physically and/or electronically; to deliver to the Clients, with their respective signatures, the Binding and Risk Agreement and keep it under its custody, and, when requested, provide the Issuer the original or a certified copy of the referred document; to maintain of all documents (on file) and information required by CVM Instruction 569/15, for a minimum term of 5 (five) years, counted from the maturity date of the COE, or longer, by express 2

3 determination of the CVM; (xi) (xii (xiii) to deliver the Confirmation to Clients, on the settlement date of the Initial Investment Value, as defined in the Terms and Conditions; not to deliver or to transfer the COE in breach of these Terms and Conditions; and the deposit of the funds necessary for the initial acquisition of the COE with the Issuer for further distribution The Operating Agreements celebrated between the Issuer and the Intermediary Institution, in accordance with Articles 1, sole paragraph and paragraph 2 of CVM No. 539/15, are automatically exempt from registration with the CVM, pursuant to Instruction 569/15, so that the placement is not considered an unregistered public offering. CHAPTER III PAR VALUE AND INITIAL INVESTMENT VALUE 3.1. The Par Value shall be indicated in the respective Confirmation, and shall be, in any case, (i) equal to the Initial Investment Value on the Issue Date, and (ii) significantly higher than the most likely income of the respective COE, at the time of its issue, under criteria established by the Brazilian Central Bank ( BACEN ) The COE shall not present, in any circumstances, during its entire duration, a value resulting in a credit by the Issuer to the Investor. CHAPTER IV Classification: 4.1. COEs are classified in two Types: COE - Capital Protection: it will ensure the Investor minimum payments, on the date of its maturity, equal to or greater than the Initial Investment Value. COE Partial Capital Protection: it will ensure the Investor minimum payments, on the date of its maturity, equal to or greater than a previously defined portion of the Initial Investment Value, as defined in the respective Confirmation CHAPTER V UNDERLYING ASSETS, INDEXES AND FEES 5.1. Regarding the underlying assets, the COE can be referenced in price indexes, bond indexes, securities indexes, interest rates, exchange rates, securities and other underlying assets, individually or combined, provided that the following requirements are observed: 3

4 I- price indexes, bond indexes, securities indexes, interest rates and exchange rates used as benchmarks must be regularly calculated in series and subject to public disclosure; and II- securities and other underlying assets used as benchmarks must present quotations regularly disclosed by stock exchanges, commodities and futures exchanges, organized over-the-counter markets or by clearing, settlement and registry of assets managing entities authorized by BACEN or CVM The values and quotations of the underlying assets must be, in any case, independent of the parameters relating to specific operations carried out by the Issuer The COE can be referenced in assets, indexes and rates disclosed or traded abroad, subject to the same requirements for assets in the item above, and exchanges and OTC markets, in which such assets, indexes and rates are traded, must be regulated by the competent foreign authorities The issuance of COE referenced in credit operations, securities, and securitization and derivatives instruments of credit is expressly prohibited, except for: i) Debentures (Local Corporate Bonds); ii) Private debt securities issued in the international market; and iii) National Treasury Bonds In case of Discontinuity of the Underlying Asset, the Issuer shall use the respective asset, index or fee to calculate the amounts due to the COE s Investors on the Contracted Maturity Date, and that, at the sole discretion of the Issuer, shall replace the one originally agreed If, at the sole discretion of the Issuer, there is no asset, index or fee to replace the Underlying Asset, the Issuer will decide on early settlement, the repurchase or the early redemption of the COE. Regardless of the decision, in case of Discontinuity of Underlying Assets, the Issuer will calculate the amounts due in good faith and in a commutative basis, determining the rate to be applied, in compliance with the applicable rules and parameters and/or the practices accepted in the financial and capital markets that are relevant to the asset hereby referred. CHAPTER VI REMUNERATION AND MATURITY 6.1. The Confirmation will indicate the calculation methodology to be observed for remuneration calculation purposes applicable for settlement on the Contracted Maturity Date The profitability of the COE will be indicated in the Confirmation as a proportion of the Initial Investment Value. 4

5 The results to be compared to the Initial Investment Value shall be consistent with the period of one year or the maturity of the COE, whichever is smaller, and the maturity should be indicated in the Confirmation The COE, which characteristics allow the realization of the null or irrelevant total payment in relation to the Initial Investment Value will reflect, in its respective Confirmation, projections indicating extreme and lowprobability conditions that demonstrate the possibility of such null or irrelevant payment to the Investor The maturity and payment of remuneration dates shall be established when contracting the COE and indicated in the Confirmation. CHAPTER VII CONTRACTING AND FORMALISATION OF OPERATIONS 7.1. Without prejudice to the provisions of Section 2.2 and other clauses of this instrument, contracting and formalisation of operations will be conducted by the Intermediary Institution, through: (i) celebration of the Operational Agreement with the Issuer, if any; (iii) signing of the Binding and Risk Agreement in which the Investor shall confirm (i) the receipt of the DIE, (ii) its agreement to the risks and characteristics of the COE; and (iii) that he/she had access to the Terms and Conditions; and (ii) delivery of the Confirmation to the Investor by the Issuer or the Intermediary Institution Each Confirmation, in accordance with current legislation, will be sent to the Investor through any written electronic mean, duly completed, confirming the contracting and also the terms and conditions of each COE, and the Investor should check it and manifest any disagreement within 02 (two) days of receipt The DIE will be available to the Investor on the website CHAPTER VIII SETTLEMENT OF OPERATIONS 8.1. The COE shall be financially settled as established by applicable laws and regulations In the case of physical settlement of the COE, upon delivery of the Underlying Asset, it shall be subject to the procedures established by the Platform in its respective manuals The calculation of the amounts to be paid to the Investor in the form of principal and remuneration, on the dates established in the respective Confirmations, will be made by the Issuer or the Platform in accordance with its respective regulation and the COE Support Documentation. 5

6 8.3. In case of Discontinuity of the Underlying Asset or in any case of early settlement, repurchase or early redemption, if applicable, the Issuer will calculate the amounts due in good faith and in a commutative basis, determining the rate to be applied, in compliance with the applicable rules and parameters and/or the practices accepted in the financial and capital markets that are relevant to the asset hereby referred Exclusively in the event of insolvency, intervention or bankruptcy of the Issuer, the COE may, at the sole discretion of the Issuer, be settled in advance observing the Replacement Value For the calculation of the amount to be paid to the Investor, the Issuer will use as a basis the amounts that a Qualified Financial Institution would charge to take over all payments of the Issuer and other obligations related to this COE as if the Issuer s insolvency, intervention or bankruptcy had not occurred, or to assume obligations that would have the effect of preserving the economic equivalent of any payment to be made by the Issuer to the Investor regarding the COE. CHAPTER IX TRANSFER AND/OR ASSIGNMENT 9.1. The transfer and/or assignment of the COE s ownership will be held exclusively through the Platform, in accordance with its manuals and regulations In case of transfer of the COE s ownership by any Investor, even without an Intermediary Institution, they will be responsible for verifying the adequacy of that COE to the risk profile of the respective assignee or purchaser and other parameters established by the applicable regulations, always providing them with the DIE, as provided by the applicable rules The Investor, whether the Intermediary Institution or its Client, shall be responsible and shall maintain the Issuer s indemnified status concerning any loss related to the transfer and/or assignment of any COE All and any assignee of the COE will be automatically subject to the terms of the Support Documentation, as applicable, becoming considered as the Investor for all purposes, and shall also analyze the risks inherent to the COE under their sole responsibility. CHAPTER X INVESTOR'S OBLIGATIONS Without prejudice to the other obligations contained in these General Terms and Conditions, Investors are obliged to: i) provide all information required for the Issuer or the Intermediary Institution, as applicable, for the correct classification of the Investor, pursuant to its Investment Adequacy Policy; ii) check the suitability of the COE to their investment profile, according to its internal investment policy, if applicable; 6

7 iii) not assign or transfer the COE in violation of the provisions of this Term; iv) in particular, verify the appropriateness of the COE to the profile of any assignees or purchasers, always providing them with the relevant Support Documentation, as applicable; v) on each COE contracted, keep all the statements made in these General Terms and Conditions, the respective Confirmations, the DIE and the Binding and Risk Agreement, as applicable, accurate and updated; and vi) maintain the Issuer s indemnified status with regard to any loss related to false or inaccurate statements, or in any way of non-compliance, by the Investor, to the agreed items in this General Terms and Conditions, Confirmations, the DIE and the Binding and Risk Agreement, as applicable. CHAPTER XI ISSUER'S OBLIGATIONS Without prejudice to the other obligations contained in these General Terms and Conditions, the Issuer is obliged to: i) Duly issue/register the COE according to the best accounting practices; ii) Ensure that the Confirmation faithfully reflects the respective contracted COE; iii) Register the COE in the Platform; iv) In case of unavailability, untimely disclosure, termination or replacement of assets, indexes and fees used as a reference of the COE, the respective asset, index or fee that may replace the one agreed originally shall be used to calculate the remuneration of the COE, given that in the absence of asset, index or fee, the Issuer will determine the reference to be adopted; v) Act as Calculation Agent, perform, diligently and in good faith, the calculations of the amounts owed to the Investor of the COE; vi) Ensure that the information required by CVM No. 539/15 and other information that may eventually be required by CVM are included in the DIE; and vii) Perform, with best efforts, procedures, internal controls and external controls described in the Investment Adequacy Policy. CHAPTER XII RISK FACTORS Without prejudice to the analysis of thetype, risk level and complexity of the COE, in accordance with its Confirmations and the DIE, the following risks for each COE should be considered by Investors: 7

8 Issuer Risk: The receipt, by the Investor, of any amount related to any COE will be subject to the Issuer s credit risk, not relying on the Credit Guarantee Fund FGC; Underlying Asset Discontinuity Risk: In case of Discontinuity of the Underlying Asset, the Issuer may not obtain, on the Contracted Maturity Date or other maturity dates, in case of early settlement, repurchase or early redemption, the information required to calculate the amounts owed to the Investor. In this case, the Issuer will be responsible for determining whether there will be an early settlement, repurchase or early redemption of the COE and perform the calculations of the amounts owed using, in case of unavailability, untimely disclosure, termination or failure to replace the assets, indexes and fees the COE used as reference, the respective asset, index or fee that, at the sole discretion of the Issuer, were to replace the one originally agreed. If there is no replacement for the asset, index or fee, the Issuer, at its sole discretion, will calculate the amounts due in good faith and in a commutative basis, determining the rate to be applied, in compliance with the applicable rules and parameters and/or the practices accepted in the financial and capital markets that are relevant to the asset hereby referred. There is no guarantee that the calculation made by the Issuer will result in the same amount that would be obtained if the Underlying Asset was discontinued. Market risk: The COE is an investment financial instrument with profitability structures that have characteristics of derivative financial instruments, whose settlement values depend on the values of the Underlying Assets and may consider not only the current value of the Underlying Assets, but also future price expectations. Due to these characteristics, the COE may experience price fluctuations that are larger than conventional assets. These fluctuations may adversely affect the market value and/or settlement of the COE; Liquidity risk: Except as provided in the respective Confirmations, the Investor may not settle its investment in the COE before the Maturity Date, as well as request their redemption or early repurchase by the Issuer, except as agreed with the Issuer. Therefore, the Investor may be subject to the secondary market liquidity of the COE and to the review the adequacy of the COE to the profile of potential new Investors. Considering that the COE is a new product in the Brazilian market, there is no secondary market for this type of product. The low liquidity of the investment in the COE may adversely affect the early settlement, repurchase or early redemption of the investment, whether due to the impossibility of sale in the secondary market or sale by an amount lower than its book value; and Taxation changes risk: Taxes, contributions and charges on the COE will be borne exclusively by the Investor, and any changes in standards and interpretations on the taxation of the COE might negatively impact the expected return The Investor should also consider any additional risk factors listed in the Binding and Risk Agreement. CHAPTER XIII TAXATION Taxes, fees, contributions and charges on the COE will be borne exclusively by the Investor. 8

9 13.2. Taxes, fees, contributions and any other taxes on the remuneration paid by the Intermediate Institution due to the resale of the COE, pursuant to Clause 2, should be retained and/or collected as the current legislation by the responsible taxpayer. CHAPTER XIV INVESTOR STATEMENTS The Investor expressly states, and ratifies his/her statement to each new contracted COE in accordance with the Support Documentation, that: (i) understands the regulations governing the COE, and is aware with the rules, regulations, operating procedures and relevant instructions issued periodically by the National Monetary Council, BACEN, the CVM and the Platform, committing to undertake all necessary actions to ensure compliance with these regulations; (ii) understands the risks related to the investment in the COE and is taking independent decisions on the execution of the investment, not guided by the advice of the Issuer or the Intermediary Institution to perform any type of operation; (iii) read, understood and accepted all the terms and conditions of these General Terms and Conditions and all documents related to it, including, but not limited to the Support Documentation, as applicable; (iv) acknowledges and accepts the risks of contracting operations with characteristics of derivative financial instruments and is aware of possible market fluctuations that may affect the investment in the COE, hereby expressly agreeing that derivatives transactions may have unpredictable results (favorable or unfavorable to the Investor); (v) understands that the investment in the COE is appropriate to his/her profile, including all the risks inherent in such instrument; (vi) is aware that the receipt of any amounts owed to him/her related to the COE is subject to the Issuer s credit risk; (vii) acknowledges and declares that has full knowledge that the Issuer, in the normal course of its activities, acts in a relevant way in derivatives markets in general and in the markets where indexes, rates, prices, conditions, rights and assets related to the COE are traded, performing, including but not limited to, hedging transactions of its positions through other operations performed in those markets. In this context, the Investor states that is aware that such operations performed by the Issuer may eventually affect, indirectly and unintentionally, the results originating from the COE contracted in accordance with the Support Documentation, as applicable; and (viii) notwithstanding any previous statement in this clause, expressly acknowledges that the COE is a risk business, where there is no assurance that the originally desired effects will be met and that such operations may result in financial losses. 9

10 CHAPTER XV GENERAL PROVISIONS The Issuer and the Intermediary Institution will act with the utmost diligence in the selection of potential investors who will acquire the COE, declaring hereby knowing the legislation on securities, investment funds, consumer protection and prevention and fight against money laundering, especially Law No. 9,613, of March 3, 1998, Law No. 12,683, of July 9, 2012, Circular Letter No. 3,542, of March 12, 2012, issued by the Brazilian Central Bank, and other regulations issued by said body and by the National Monetary Council, as well as CVM Instruction No. 301, of April 16, 1999, and any amendments thereto Telephone conversations, s, messages, electronic access or any other means generally accepted and used by the staff responsible for the negotiation and execution of the COE, the object of this Terms and Conditions, may be recorded, and s, messages and electronic access in this regard may be filed, and may such recordings, s, messages, electronic access, or any other means generally accepted may be presented as evidence to any court or in any proceedings related to these General Terms and Conditions These General Terms and Conditions and the respective Confirmations will be governed by the laws of the Federal Republic of Brazil and the Portuguese language. Any and all questions and/or dispute arising from these General Terms and Conditions, and/or any COE issued in accordance to it, shall be clarified exclusively at the Court of the City of São Paulo, State of São Paulo, excluding any other, however privileged it may be Finally, the following points are highlighted, under current regulations: THE DOCUMENTATION RELATED TO ANY COE ISSUED IN ACCORDANCE IT WERE PREPARED WITH THE INFORMATION REQUIRED TO THE COMPLIANCE WITH THE BEST MARKET PRACTICES ESTABLISHED BY THE ANBIMA REGULATING CODE AND FINANCIAL INSTRUMENTS BEST TRADING PRACTICES. THE COE ISSUED IN ACCORDANCE WITH THESE GENERAL TERMS AND CONDITIONS IS SUBJECT TO THE ISSUER S CREDIT RISK. THE COE DOES NOT RELY ON THE CREDIT GUARANTEE FUND FGC. THE PROVISION OF THESE GENERAL TERMS AND CONDITIONS, OF THE DIE, OF THE BINDING AND RISK AGREEMENTOR CONFIRMATION, DO NOT IMPLY, BY BACEN, CVM, ANBIMA OR ANY OTHER REGULATORY AUTHORITY OR SELF-REGULATOR, ON THE ACCURACY OF THE INFORMATION PROVIDED, ON THE COE ADEQUACY TO APPLICABLE LAW OR ANY EVALUATION ON THE QUALITY OF THE COE, THE ISSUER, OR INTERMEDIARY INSTITUTION. 10