CMVM Regulation No. 7/2007 Real Estate Funds and Collective Investment Undertakings

This does not dispense with the need to consult the original Portuguese version published in the Official Gazette. CMVM Regulation No. 7/2007 Real Estate Funds and Collective Investment Undertakings (Amends CMVM Regulation No. 8/2002 and CMVM Regulation No. 15/2003) Although Directive No. 2004/39/EC, of 21 April, on the Markets in Financial Instruments (MiFID), is not generally applicable to the Collective Investment Undertakings, its management entities and depositaries, the influence of said Directive on the congruence of the markets in financial instruments has the necessary repercussions on the framework of said Undertakings. Within this context, the explicit enshrinement of the principle whereby the intermediary should not only know the client but also whether the services, transactions and financial instruments in question and the new rules on the classification of clients are appropriate to the personal circumstances of the client, requires that the decision as to the appropriateness of the specific financial instrument to the client should first be made by the financial intermediary. On the other hand, relinquishing the so-called concentration rule and resulting supremacy of trading on a regulated market as laid down by the MiFID prescribed the amendment to Article 47 Legal Framework for Collective Investment Undertakings. Said Article now only requires a specific registration concerning transactions on financial instruments admitted to trading on a regulated market executed outside a regulated market or multilateral trading facility. The necessary regulatory amendments have now been approved. Similar to the Framework applicable to regulated markets and multilateral trading facilities, it also decreed the need for prompt regulatory amendments. Finally, following careful consideration of the impact on certain regulatory rules and the administrative burdens resulting therefrom and the conclusion that it would be fitting to relinquish the administrative formalities, the withdrawal of which does not place the correct performance of the CMVM s supervisory powers in doubt, the prompt amendments are hereby inserted. These amendments seek to streamline certain administrative procedures. By way of illustration, replacing the registration of real estate appraisers with a prior notification to the CMVM and not requiring the merger of private issue closed-end real estate investment funds to be subject to the authorisation of the CMVM should be noted. 1

The Portuguese Investment Funds, Pension Funds and Asset Management Association (APFIPP) was consulted. Thus, pursuant to Article 369/1 Securities Code, Article 60/i), /l), /o) and /p) Decree-law No. 60/2002, of 20 March and Article 83/a), /b), /i), /j), /q), /s), /t), /v) and /z) Decree-law No. 252/2003, of 17 October, the Executive Board of the CMVM (Comissão do Mercado de Valores Mobiliários) hereby approved the following Regulation: Article 10 Amendments to the wording of CMVM Regulation No. 8/2002 1 Articles 3, 7-F, 9, 9-B, 18, 19, 20, 23, 30, 32, 33, 35, 41, 45, 46 and 47 of CMVM Regulation No. 8/2002 are hereby amended to read as follows: 1. [...] 2. [...] 3. [...] Article 3 (...) 4. Without prejudice to the preceding paragraph and by the end of April, the management companies should annually update the information on the historic yield and risk of the fund in the prospectus. An updated copy thereof should be sent to the CMVM by the 5th business day following the end of the month. 5. [...] 1. [...] 2. [...] 3. [...] 4. [...] Article 7-F (...) 5. The subscription of investment units in an FEII is based on a subscription form which includes an unequivocal statement on the risk inherent to the investment proposed to the subscriber. 6. The application for authorisation of a FEII is accompanied by the subscription form. 1 Republished in the Appendix 2

Article 9 (...) 1. [...] 2. The remaining assets are valued at the closing price of the most liquid market, where the securities are admitted to trading, or otherwise, in accordance with the provision of the Legal framework for Venture Capital Funds and Companies. 1. [...] Article 9-B (...) 2. When the guarantees provided by credit institutions are used, the application for the authorisation of the guaranteed FII is accompanied by a draft of the guarantee contract. 3. [...] 4. Guarantees, which hinder or thwart the immediate payment to participants of the guaranteed amounts, may not be used in the event of calling on guarantees. 5. [...] Article 13 ( ) 1. The management entities of real estate funds may use derivatives in order to hedge the risk of the fund assets which are managed by said entities. 2. ( ) 3. ( ) 1. [...] Article 18 (...) 2. The CMVM is to be notified in advance of the use of valuation reports drawn up by a foreign appraiser who is subject to control of qualification in his Home Member State. Within 15 days from said notification, the CMVM may raise an objection thereto. 3. [...] 4. [...] 3

Article 19 Notification and Certification 1. The real estate appraisers of real estate investment funds should notify the CMVM prior to commencing business. 2. The notification referred to in the preceding paragraph should include the following updated details: a) [...] b) [...] c) [...] d) [...] e) Questionnaire drawn up by the CMVM and filled in by the person concerned and including at least the following details: i. [...] ii. [...] iii. [...] 3. The public liability policy shall have a minimum value of 250,000 per real estate appraiser. A copy of each new policy or document supporting the update or renewal of a previous policy shall be submitted to the CMVM within 15 days of the issuance thereof. 4. [...] 5. [...] 6. [...] 7. [...] 8. [...] 9. Without prejudice to paragraph 2, the real estate appraisers certified pursuant to the preceding paragraph and with proven professional experience in the appraisal of real estate in real estate investment funds may pursue the activity provided the notification referred to in paragraph 1 is submitted. The respective notification should be accompanied by a report substantiating the decision of the certifying entity. 10. [...] 4

Article 20 (...) 1. [...] 2. The management entity of the fund is responsible for the submission to the CMVM of the details that confirm the requirement verification envisaged in the preceding paragraph. Article 23 Non-Compliance The non-compliance by real estate appraisers with the legal rules, to which same are subject, is ground for the CMVM to suspend the activity of appraising real estate in real estate investment funds. 1. [...] 2. [...] 1. ( ) 2. ( ) 3. ( ) 4. ( ) Article 30 (...) Article 32 5. The real estate of the merging investment funds is valued prior to the merger, if the latest valuation is more than six months before the date of the merger. 6. ( ) Article 33 (...) 1. Unless otherwise stated in paragraph 5, the merger of investment funds is subject to authorisation by the CMVM. The latter shall issue a statement within 30 days as from the date the application is received or the supplementary information is submitted, if so requested. 2. [...] 3. [...] 4. [...] 5

5. The merger of privately placed closed-end funds is not subject to authorisation, but nevertheless is subject to the CMVM being notified within 30 days prior to said merger. Said notification is to be accompanied by the information referred to in paragraph 2. 1. [...] 2. [...] 3. [...] Article 35 Unit-holders Rights 4. In the event of an increase in the redemption or transfer commissions or a worsening in its calculation for the investment fund that results from the merger, the redemption or transfer commissions of the integrated funds shall apply to the unit-holders of the integrated funds. This shall only be applicable to the investment units of the integrated or new fund which are assigned pursuant to paragraph 1. 5. If there is a global increase in the management or deposit commissions or a substantial change in the investment policy of the fund which results from the merger, the unit-holders of the integrated fund may redeem the investment units without paying the respective commission within one month after the date of the merger. 6. For the purposes of ascertaining the redemption conditions applicable to the unit-holders, the subscription date of the units to be considered is the date on which the investment units of the integrated funds were subscribed. [Previous paragraph 2] 1. [...] 2. [...] 3. [...] 4. [...] Article 41 (...) Article 45 (...) 5. Risk measures shall also be disclosed whenever yield measures are disclosed. 6

Article 46 (...) 1. [...] a) [...] b) Annual yield = (1 + Actual yield) 365/n 1 where: n = the number of days in the reference period of the actual yield used. 2. [ ] 3. [...] 4. [...] 5. [...] 6. [...] 7. The information on the level of risk may be provided by means of the identification, expressed as a percentage, of the annualised standard deviation, risk category or scale of risk. 1. [...] 2. [...] 3. [...] 4. [...] Article 47 (...) 5. Reference periods, which ended more than one month prior to the disclosure date of the yield measures or more than three months prior to the advertising campaign that is currently in progress, may not be used. 6. [...] 7. [...] 7

Article 2 Amendment to the Appendix of the CMVM Regulation No. 8/2002 1. The notice set out in Appendix II to the CMVM Regulation No. 8/2002 is hereby amended to read as follows: The authorisation of the fund by the CMVM is based on legal criteria. This does not involve any guarantee by the CMVM as to the adequacy, truth, impartiality or currentness of the information provided by the management entity in the management rules and regulations. It also does not involve any judgment on the quality of the assets that comprise the fund's portfolio. 2. Chapters V and VI of Appendix II to the CMVM Regulation No. 8/2002 is hereby amended to read as follows: 1. (...) 'Chapter V (...) 2. Consultation of the Fund Portfolio - The composition of the fund portfolio is published monthly in the Euronext Lisbon Daily Bulletin, a mass-circulation newspaper or the CMVM Information Disclosure System. 3. (...) Chapter VI (...) Statement that the annual and half-yearly accounts of the funds shall be closed as at 31 December and 30 June and shall be made available in the three or two months subsequent thereto, respectively. 8

Article 3 Amendments to the wording of CMVM Regulation No. 15/2003 2 Articles 1, 9, 19, 22, 23, 26, 34, 53, 55, 69, 70, 71, 74, 84, 87, 89, 92, 97 and 99 of CMVM Regulation No. 15/2003 are hereby amended to read as follows: a) [...] b) [...] 'Article 1 (...) c) Transactions executed outside a regulated market or MTF, on shares admitted to trading on a regulated market; d) [...] e) [...] f) [...] g) [...] h) [...] i) [...] j) [...] l) [...] 1. [...] 2. [...] Article 9 (...) 3. The application for authorisation of a flexible UCITS is accompanied by a copy of the subscription form. 4. [...] 1. [...] Article 19 (...) 2. When guarantees provided by credit institutions are used, an application for authorisation of a guaranteed UCITS shall be accompanied by a draft of the guarantee contract. 2 Republished in the Appendix 3. [...] 9

4. In the event of the guarantees being called upon, the guarantees, which make the immediate payment to unit-holders of the guaranteed amounts difficult or impossible, shall not be used. 5. [...] Article 22 ( ) 1. The exposure in derivatives referred to in Article 46/3 of the Legal Framework for Collective Investment Undertakings, approved by Decree-Law no. 252/2003, of 17 October, is measured in accordance with the type of each instrument, such as the following: a) The reference price in futures; b) The result of multiplying the spot price of the underlying asset by the delta of the option in options; c) The respective notional value in futures and swaps. 2. ( ) 3. In imposing the limit envisaged in the preceding paragraph, the management entity shall take into account any recent substantial changes recorded in the market volatility. This includes considering as a presupposition in the minimum that the portfolio of the UCITS is held for a period of 30 days, has a confidence interval of 95% and for the purpose of calculating the volatility, the comments for one year. 4. ( ) Article 23 ( ) 1. Pursuant to paragraph 2 of the preceding Article, the following UCITS shall be exempted from the calculation of the increase in the maximum potential loss: a) That do not exceed a total exposure of 100% of their net asset value; and b) That do not invest more than 10% of their net asset value in option premiums;; c) That exceed a total exposure of 100% of their net asset value, but which is solely due to holding derivatives for the purpose of risk coverage and the underlying assets of which are identical to those held by the UCITS. 2. ( ) 10

Article 26 (...) (...) a) Have credit institutions envisaged in Article 45/1/d of the Legal Framework for CIUs, established by Decree-Law No. 252/2003, of 17 October, or management entities of regulated markets, multilateral trading facilities, clearance systems or settlement systems as counterparties. b) [...] c) [...] d) [...]. Article 34 Registration of Transactions In accordance with Appendix 5 to this Regulation, the management entities shall keep an organised and updated specific and independent register of the transactions on assets admitted to trading on a regulated market that are executed outside a regulated market or multilateral trading facility. 1. [...] Article 53 (...) 2. Whenever marketing for retail investors is envisaged, the management entity shall submit to the CMVM the respective plan for formation of networks which will be responsible for providing said marketing. 3. [...] 1. [...] 2. [...] Article 55 (...) 3. The subscription of investment units in a Special Investment Undertaking shall be carried out by means of a subscription form that shall include an unequivocal reference to the risk inherent to the investment proposed to the subscriber. 4. The application for authorisation of a Special Investment Undertaking shall be accompanied by a copy of the subscription form. 5. [Previous paragraph 4] Article 69 (...) 11

1. The management entities shall update the information in the simplified prospectus whenever changes that are made to the full prospectus involve matters included in the simplified prospectus. 2. The management entities shall update the simplified prospectus by the end of April of each year, particularly in relation to the information referred to in Article 67/1/n), /p) and /w), and send an updated copy to the CMVM by the fifth business day of the following month. 3. The updating of the full and simplified prospectus in accordance with the preceding paragraph does not depend on approval by the CMVM. 1. [...] 2. [...] Article 70 (...) 3. The marketing entities for Collective Investment Undertakings referred to in paragraph 1 shall request from the client the necessary information regarding the client's knowledge and experience with Collective Investment Undertakings and, if necessary, his financial position and investment objectives in order to assess the suitableness of the product to the personal circumstances of the client, such as the risk profile. 4. If applicable, in the assessment referred to in the preceding paragraph, the marketing entities shall caution the client of the following in writing: a) The marketed CIU is not suitable to the client's personal circumstances, or b) The information conveyed does not enable the entity to determine the types of CIU that are suitable to the client's personal circumstances. 5. The provisions of the preceding paragraph are not applicable to the marketing of harmonised UCITS. 6. [Previous paragraph 3] Article 71 (...) 1. In the case of CIUs not domiciled in Portugal and that comply with the provisions of the Council Directive 85/611/EC as amended by the Directives 2001/107/EC and 2001/108/EC of the European Parliament and of the Council, the marketing entity shall submit the marketing contract to the CMVM in advance. 2. [...] a) [...] 12

b) [...] c) [...] d) [...] e) The types of marketing envisaged for the investment units in Portugal and a draft of the marketing contract; f) [...] 3. [...] 4. [...] 5. [...] 6. [...] 7. [...] 1. [...] 2. [...] 1. [...] 2. [...] 3. [...] 4. [...] Article 74 (...) Article 84 (...) 5. In the case of Special Investment Undertakings, where the application by the management entity is duly substantiated, the CMVM may authorise that the information envisaged in paragraph 1 be published with concession as to the reference date of same. 13

Article 87 (...) 1. [...] 2. [...] 3. [...] 4. Risk measures shall also be disclosed whenever yield measures are disclosed. 1. [...] 2. [...] 3. [...] 4. [...] 5. [...] Article 89 (...) 6. No reference periods, which ended more than one month prior to the disclosure date of the yield measures or more than three months prior to the advertising campaign that is currently in progress, may be used. 7. [...] 8. [...] 1. ( ) 2. ( ) 3. ( ) Article 90 ( ) 4. The information on the level of risk may be provided by means of the identification, expressed as a percentage, of the annualised standard deviation, risk category or scale of risk. 14

Article 92 (...) 1. [...] 2. [...] 3. Two or more CIUs may be subject to a merger provided that there are no conclusive discrepancies between said funds in terms of the respective investment policies. The eligibility for this purpose is subject to approval by the CMVM within the context of the merger authorisation process. 4. [...] 5. [...] 1. [...] 2. [...] 3. [...] 4. [...] Article 97 (...) 5. Unless authorised by the CMVM, the liquidation of a CIU pursuant to paragraph 1 makes the constitution of a new CIU within 180 days by the same management entity and with an identical investment policy impossible. 6. [...] 7. [...] 8. [...] 9. [...] 10. [...] 1. [...] 2. [...] 3. [...] Article 99 (...) a) A breakdown of all the transactions carried out for the purposes of liquidation, including if applicable, identification of the counterparties in the transactions executed outside the regulated market or multilateral trading facility when assets that are admitted to trading on a regulated market are involved; 15

b) [...]. Article 4 Addendum to CMVM Regulation No. 15/2003 Article 72-A is hereby inserted in CMVM Regulation No. 15/2003 with the following wording: Article 72-A Investment Unit Categories Without prejudice to the provisions of the preceding Article, another category of investment unit may also be issued, such as, the degree of preference for the payment of periodic income, redemption of value, or payment of the liquidation balance of the respective CIU and the commissions established. This may take place provided the instruments of incorporation envisage this and spell out the relationship between the structure of the CIU and the criteria that complies with said distinction. Article 5 Amendment to Framework and the Appendices to CMVM Regulation No. 15/2003 1. Subsection II of Section I of Chapter II of Title II CMVM Regulation No. 15/2003 is hereby amended to read as follows: Transactions outside a Regulated Market and Multilateral Trading Facility. 2. Appendix 5 to CMVM Regulation No. 15/2003 is hereby amended to read as follows: APPENDIX No. 5 Carrying out of Transactions on Assets admitted to Trading on a Regulated Market executed outside a Regulated Market or Multilateral Trading Facility (Information provided for in Article 34) Name of Management Entity: Name of UCITS: UCITS Code: Entities Structure Description of Transaction Financial Intermediary Counterparty of Transaction carried out Date Time Asset Quantity /Par value Type of Transaction Price Total Costs Incurred A) B) C) D) E) F) Total Value Data on the Regulated Market where the Securities are admitted to Trading Market Identification Quantity traded in the Session Regulated Market Commission Maximum Price Minimum Price 16

Notes: A) Identification of the financial intermediary in the transaction, if applicable. B) Identification of the counterparty in the transaction. C) Name of the structure where the transaction was carried out. D) Full name of the security, with ISIN code. E) Type of transaction: buy / sell. F) Costs incurred by the UCITS which resulted directly from carrying out the transaction outside a regulated market or multilateral trading facility. 3. The notice set out in Appendix 8 to the CMVM Regulation No. 15/2003 is hereby amended to read as follows: The authorisation of the fund by the CMVM is based on legal criteria. This does not involve any guarantee by the CMVM as to the adequacy, truth, impartiality or currentness of the information provided by the management entity in the management rules and regulations. It also does not involve any judgment on the quality of the assets that comprise the fund's portfolio. 4. Paragraphs 4 and 5 of Chapter II of Appendix 8 to CMVM Regulation No. 15/2003 are hereby amended to read as follows: 4. Exercise of voting rights. If applicable, the general policy of the management entity concerning the exercise of voting rights conferred by the shares held by the CIU should be indicated in accordance with the provisions of Article 81 of this Regulation. The reference should thus contain at least the following information: a) [...] b) [...] c) [...] 5. Commissions and charges to be borne by the CIU. All charges to be borne by the CIU should be stated, by means of the inclusion of a table of costs (in which the charges directly borne by the investor and those which are payable by the CIU are differentiated) and the Global Costs Rate (TGC) presented in accordance with the provisions of Article 68 of these Regulations and the average portfolio turnover in accordance with Appendix 10. 17

5.1. [...] 5.2. [...] 5.3. [...] The following are hereby repealed: Article 6 Provisions Repealed a) Article 29, Article 30/3, /4 and /5 and Article 41/1 CMVM Regulation No. 8/2002; b) Articles 33 and 73 CMVM Regulation No. 15/2003. Article 7 Entry into Force This Regulation shall come into force on the day after publication. Lisbon, 9 November 2007 Chairman of the Executive Board, Carlos Tavares; Vice- Chairman of the Executive Board, Amadeu Ferreira 18

Appendix A Republication of the CMVM Regulation No. 8/2002 Real Estate Investment Funds (With the amendments introduced by the CMVM Regulation no. 1/2005 and No. 7/2007) Chapter I Scope Article 1 Scope This Regulation governs the following matters pertaining to real estate investment funds: a) Information documents to be drawn up for each type of fund (Chapter II); b) Rules for the composition and valuation of the portfolio (Chapter III); c) Valuation of real estate properties and real estate appraisers (Chapter IV); d) Calculation of the value of investment units and marketing of the same (Chapter V); e) Merger and conversion of funds (Chapter VI); f) Information to be provided to the market and to the CMVM (Chapter VII). Chapter II Information Documents Section I General Rules Article 2 Preparation of Documents 1. Management entities should prepare, for each real estate investment fund under their management, a prospectus, and management rules and regulations. 2. The information contained in the documents referred to in the preceding paragraph should be complete, true, updated, clear, objective and lawful. 3. The management entity may supplement the information with the use of charts, tables or other graphical representations. 19

Section II The Prospectus Article 3 Updating and Form 1. A prospectus should be prepared, in accordance with this Regulation, for each open-end fund and balanced fund under its management, in accordance with the model provided in Appendix I. 2. The prospectus should be delivered to the subscribers of the fund prior to the subscription of investment units. 3. The prospectus should be updated whenever the management rules and regulations are amended on any matters which are also in the prospectus. 4. Without prejudice to the preceding paragraph and by the end of April, the management entities should annually update the prospectus with reference to the information on the historic yield and risk of the fund and should send an updated copy to the CMVM by the 5th business day following the end of the month. 5. For closed funds the investment units of which are to be placed through a public offer, an issue prospectus in accordance with the CMVM Regulation 10/2000 should be prepared. Article 4 Content 1. The prospectus should contain the following information, as well as the matters referred to in Article 23/2 of the Legal Framework for Real Estate Investment Funds, approved by Decree-Law 60/2002, of 20 March: a) Name of the fund and date of its constitution; b) Identification of the management entity (full name, and principal office); c) Identification of the depositary of the fund (full name); d) The fund s auditors; e) Identification of the placement entities of the fund (full names); f) Identification of the fund s real estate appraisers; g) Identification of the fund s investment adviser; h) Type of fund, and its duration; 20

i) The fund s policy on distribution of returns; j) Historic yield and risk charts showing the fund s yield and investment unit value over the last five calendar years or, if this is not applicable, since the beginning of the fund s activity; and quantification of the yields obtained and of risk in the same period, through the annually adjusted standard deviation of weekly yields; k) A statement pointing out that the data on which past risk and yield are based are facts of the past, and for this reason there is no guarantee that said facts will be repeated in the future; l) A brief description of the fund s investment policy; m) The risk associated with investments in real estate markets; n) Profile of the investor to whom the fund is targeted; o) Conditions of subscription and redemption of investment units; p) Commissions on subscription and redemption of investment units; q) Charges borne by the fund; r) Manner of determining the value of the investment unit, subscription price and redemption price; s) Indication of the places where the value of the unit is disclosed; t) Indication of the markets where the investment units are admitted for trading, or expected date for this admission to take place, if applicable; u) Information on the conditions, manner and place of payments due to unitholders, for the purpose of yield distribution or redemption of investment units; v) Places and means for the marketing of funds; w) Description of the tax system applicable to the fund and to unit-holders; x) Contact for answering any queries relating to the investment fund; y) Place where other documentation on the fund may be consulted, specifically reports of activity and composition of the fund s portfolio; z) Date of the last update of the prospectus. 2. As well as the information referred to in the preceding paragraph, the CMVM may require the introduction of supplementary information in view of the particular characteristics of the investment fund. 21

Section III Management Rules and Regulations Article 5 Form and Content The management rules and regulations of each investment fund should contain all the information specified in Article 22/1 of the Legal Framework for Real Estate Investment Funds, approved by Decree-Law 60/2002, of 20 March, and should be prepared and presented in accordance with the model in Appendix II to this Regulation. Chapter III Fund Portfolios Section I Composition Article 6 Assets 1. Apart from the assets which are directly provided for in Article 25 and 25-A of the Legal Framework for Real Estate Investment Funds, the real estate investment funds may also hold investment units in other real estate investment funds, notwithstanding the provision set forth in the following Section. 2. Investment units in real estate companies and investment units in other real estate investment funds are taken into account for the purposes of compliance with the minimum limit of real estate holdings by the acquiring fund. Article 7 Limits for other assets 1. The limit for acquisition of the investment units referred to in paragraph 1 of the preceding Article is 25% of the total assets of the funds on behalf of which the acquisition is made. 2. The management entity may not, in relation to the group of funds which it manages, acquire more than 25% of the investment units of a real estate investment fund. Section I-A Special Real Estate Investment Funds Article 7- A General Provisions 1. The constitution and functioning of special real estate investment funds (fundos especiais de investimento imobiliário FEII) are governed by the provisions of this Section, and, with regard to all matters not incompatible with their nature, by the provisions of the Legal Framework of Real estate investment funds and of this Regulation. 22

2. The name of an FEII should refer to the investment policy pursued and contain the expression Fundo Especial de Investimento Imobiliário (Special Real estate investment funds). 3. FEII are marketed to specific categories of investor defined in the management rules and regulations and prospectus. Article 7 B Portfolio Apart from those assets which are generally likely to comprise the portfolio of real estate investment funds, the portfolio of FEII may also comprise mixed or rural buildings, simple rights to develop real estate and derivatives. Article 7 C Investment limits 1. Without prejudice to the provisions of the following paragraphs, the limits for investment in the assets comprising the portfolio of FEII are established in the respective management rules and regulations. 2. Open-end or closed-end special real estate investment funds which are the object of a public subscription offer and which invest in rural buildings are not permitted to invest in: a) More than 20% of the total assets of the fund in the same municipality or equivalent territorial district; and b) More than 30% of the total assets of the fund in contiguous municipalities or equivalent territorial districts; and 3. If the respective assets have been insured, the limits established in subparagraphs a) and b) of the preceding paragraph shall be 50%. Article 7 D Management rules and regulations 1. Without prejudice to other information which is generally required, the management rules and regulations shall, in particular, define the following: a) The type of assets which may comprise the fund portfolio and respective limits; b) The respective operating rules, in particular those related to the conditions of occurrence of subscriptions and redemptions; c) The maximum limit per lessee, according to the total assets of the investment fund; d) The powers of advisory committees or investment committees or independent consultants, as the case may be; e) The use of derivatives for the purpose of risk coverage; 23

2. Notwithstanding those matters referred to in the preceding paragraph, the management rules and regulations of FEII aimed at investors different to those stipulated in Article 30 of the Portuguese Securities Code should contain clear and objective information on the following: a) The special nature and objectives of the FEII, by means of an appropriate description of its investment policy, its management techniques and the past experience of the management entity; b) The rules, methods and procedures for evaluation of the assets comprising the FEII portfolio, based on models of fair price evaluation which are universally accepted; c) Any restrictions to subscriptions and redemptions, referred to in Article 7-F/4, and, in such cases, the periodicity of the calculation and publication of the value of the investment unit; d) The methods of payment, specifically in the case of subscription or redemption in kind; e) The investors at which the FEII is aimed. Article 7-E Authorisation 1. The application for authorisation by constitution of an FEII should be accompanied, by documentary proof of the experience and ability of the management entity of the respective management entity, with special attention being given to the respective investment policy, its objectives, the management techniques employed and the type of assets in which it invests, and the names of entities providing consultancy services, if any. 2. Whenever there are plans for marketing to the public, the management entity should submit to the CMVM the respective plan for formation of the networks which will be responsible for providing intermediation related to the placement. 3. The CMVM may refuse to authorise the marketing of FEII to specific segments of investors, if sufficient conditions for their protection are not provided. 4. The CMVM may refuse certain types of assets for the constitution of FEII, whenever this is necessary for the protection of investors and of the regular functioning of the market, in particular by virtue of the lack of transparency in relation to the markets where they are to be traded, the valuation of these markets or the investment units of the FEII. Article 7-F Subscription and Redemption 1. The minimum value of each subscription of investment units in an FEII is: a) 15 000; or b) A different amount imposed or accepted by the CMVM, taking into account the specific characteristics of each FEII. 2. When an FEII carries a guarantee of capital invested, provided by third parties not connected with the FEII or with the unit-holders, as described in Article 9-A, the limits established in the preceding paragraph shall not apply. 24

3. Closed-end FEII for private subscription may define conditions and criteria relative to the following matters, in their management rules and regulations: a) Initial subscription, the duration of which may not be more than 25% of the initial period of duration; b) The possibility of partial amortisations of the value of the investment units. 4. Open-end FEII, provided that they define the respective conditions in their management rules and regulations, may establish specific periods for subscription and redemption. 5. The subscription of investment units in an FEII is based on a subscription form which includes an unequivocal statement on the risk inherent to the investment proposed to the subscriber. 6. The application for authorisation of a FEII is accompanied by the subscription form. Article 7-G Financial Information 1. In the periodic accounting documents, emphasis should also be given to the following, when applicable: a) The overall performance of the FEII and of the assets which comprise it, taking into account the pursuit of its objectives and its strategic guidelines; b) The carrying out of transactions on the assets comprising the portfolio of the FEII. 2. The management entity should inform investors, at least on a half-yearly basis, in terms appropriate to their degree of knowledge, of any changes to the level of risk inherent to the FEII, including a description of the respective conditioning factors and any material factors which have an impact on the equity value of the fund. Article 7-H Funds of Real Estate Investment Funds The provisions of Article 56/2 and /3 of the Legal Framework for Collective Investment Undertakings, approved by Decree-Law no. 252/2003, of 17 October and Article 10/1 and /4 of the CMVM Regulation no. 15/2003 shall apply to funds of real estate investment funds, with the necessary adaptations. 25

Section II Valuation Article 8 Real Estate 1. Completed real estate should be valued in the interval between their acquisition cost and the arithmetic mean of the valuations by the respective real estate appraisers. 2. Real estate acquired under co-ownership are inscribed in the assets of the fund in proportion to the part acquired by the fund, subject to the rule in the preceding paragraph. 3. Real estate acquired under a regime of exchange should be valued in the assets of the fund at their market value, and the liability arising from the respective counterpart, posted in the fund s liabilities, should be registered at its cost price or construction cost. 4. Construction projects should be revalued in accordance with the methods defined in the management rules and regulations of the funds, or whenever the project situation report prepared by the inspection company shows an increase of value of 10% in relation to the previous report. 5. The contribution of the real estate acquired in accordance with paragraph 3 for the purposes of compliance with the legal limits should be calculated as the difference between the value posted in assets and the value posted in liabilities. 6. Acquisition of real estate for a price higher than the arithmetic mean referred to in paragraph 1 should be justified to the CMVM. 7. The management entity should inform the CMVM annually, within the period applicable for submission of the fund s accounts, of the difference between the accounting value of the total of its real estate portfolio and the arithmetic mean referred to in paragraph 1. Article 9 Evaluation of other Assets 1. Investment units in investment funds are valued at the most recent value disclosed to the market by the respective management entity, except in the case of investment units admitted for trading in regulated markets, to which the following paragraph applies. 2. The remaining assets are valued at the closing price of the most liquid market, where the securities are admitted to trading, or otherwise, in accordance with the provision of the Legal framework for Venture Capital Funds and Companies. 26

Section II-A Real Estate Guaranteed Funds Article 9- A Legal Requirements 1. Real Estate Guaranteed Funds are those which have associated guarantees of capital or of a determinate yield profile. 2. The management of Real Estate Guaranteed Funds shall be conducted in a manner independent of any need which may occur to rely on the guarantees, in strict compliance with the investment policy and safeguarding the interests of unitholders. 3. The names of the real estate investment funds may contain the expression Fundo garantido (guaranteed fund), provided that, if the guarantee associated with the fund is not one which may be called upon at any moment, reference is made to this fact in all advertising and information material. Article 9 B Guarantees 1. For the effects of the provisions set forth in the preceding Article, recourse may be had to guarantees granted by credit institutions to the investment fund or its unit-holders, and also to the structuring of the portfolio of the fund with financial instruments which are appropriate to the objectives of the guarantee to be granted. 2. When the guarantees provided by credit institutions are used, the application for the authorisation of the guaranteed FII is accompanied by a draft of the guarantee contract. 3. The management entity should carry out all the necessary procedures for calling on the guarantees. 4. Guarantees, which hinder or thwart the immediate payment to participants of the guaranteed amounts, may not be used in the event of calling on guarantees. 5. When the guarantee is given by means of the structuring of the assets and liabilities of an investment fund, the management entities should submit to the consideration of the CMVM a memorandum explaining the transaction, with the following minimum content, without prejudice to additional details which the CMVM may demand: a) The type and characteristics of the financial instruments used; b) Demonstration of how these financial instruments will ensure the guarantee that they are intended to provide; c) The costs to be met by the investment fund; d) Any counterparties of the investment fund in these instruments; e) Updated information on the economic and financial situation of the counterparties. 27

Article 9 C Guarantors In the case of entities which are, in relation to the management entity, in the situations specified in Article 28/3 of the Legal Framework for Real Estate Investment Funds, established by Decree-Law No. 60/2002, of 20 March, being constituted as guarantors or counterparties for an investment fund, the management entity shall comply with the principle laid down in Article 9-A/2 before the CMVM. Section III Forms of business operation of real estate properties Article 10 Rental 1. Without prejudice to Article 38/1/d) and Article 46/1/c, of the Legal Framework for Real Estate Investment Funds, approved by Decree-Law 60/2002, of 20 March, rental or other forms of business use of real estate held by funds in which the counterparty is an entity referred to in paragraph 3 of Article 28 of said framework may take place only if the CMVM is not opposed to it. 2. The CMVM is deemed not to be opposed if, after 15 days from receipt by the CMVM of the application or any additional details it requires, the applicant is not otherwise notified. 3. The application referred to in the preceding paragraph should contain details which prove the advantage of the transaction for the fund, specifically: a) a brief statement by the applicant attesting the advantages of the transaction; b) a draft of the rental contract or other form of business transaction related to the property; c) the value of rental or proceeds from the transactions; d) a comparison of the amounts referred to in the preceding sub-paragraph with those practiced in the same property for other lessees, or in adjacent properties which can serve as the basis for comparison. Article 10- A Building projects 1. Real estate investment funds are permitted to develop building projects in partnership with entities which are qualified and possess recognised technical competence and experience in the real estate sector. 2. Relations between funds and the entities referred to in the preceding paragraph shall be governed by a written contract, which shall protect the best interests of the fund and its unit-holders. 28

3. The investment fund management entity shall exercise active control over the development of the projects referred to in paragraph 1, and is permitted to advance quantities which are not unequivocally related to the cost of executing the project. Section IV Charges assigned to the Funds Article 11 Management and Deposit Commission 1. Management commissions and deposit commissions payable, respectively, to the management entity and the depositary, under the terms defined in the management rules and regulations of the funds, are assigned to the fund. 2. The deposit commission may not be worth more than the management commission. 3. The management commission may be made up, in part, of a component which varies according to the performance of the fund, or the performance of an indicator which is significant to the real estate market with which the fund can reasonably be compared. 4. Whenever a variable management commission is specified, the maximum percentage limit that such commission may reach should be established, and the management entity should define in the management rules and regulations of the fund the manner in which any commissions due will be settled. Article 11- A Non-pecuniary Gains 1. Non-pecuniary gains are defined as the provision of services free of charge to the management entity, or to an entity which it is in a controlling or group relationship with, as defined in Articles 20 and 21 of the Securities Code, or to the corporate bodies of the management entity or its employees, when such services arise from the business relationship established by the management entity on behalf of the investment fund. 2. Such gains may only be assigned if provided for in the instruments of incorporation of the investment fund and if this has a positive effect on the service provided to the unit-holders. 3. For the effects of the preceding paragraph, the management rules and regulations of the investment fund shall identify: a) A list of income which may be assigned and the person to whom they were destined; b) The nature of the entities from which the income may be received and the conditions which should be met for these to be assigned. 29

Article 11 B Pecuniary gains 1. Pecuniary gains are defined as any sum received by the management entity, or by an entity with which it is in a controlling or group relationship, as defined in Articles 20 and 21 of the Portuguese Securities Code, or by the corporate bodies of the management entity or its employees, which sum arises from the commercial relationship established by the management entity on behalf of the investment fund. 2. Income referred to in the preceding paragraph shall revert in its entirety to the portfolio value of the investment fund, with the exception of that which constitutes consideration for the provision of services and is appropriately and adequately established in a contract. Article 12 Other Charges 1. As well as the commissions mentioned in the preceding Article, the following costs directly connected with the portfolio of the fund are attributed to the fund, provided that they are duly documented and identified in the management rules and regulations: a) conservation and maintenance of the assets; b) charges related to purchase, sale and rental or leasing of the assets; c) charges related to the making of insurance contracts on the assets mentioned in the preceding subparagraph; d) real estate intermediary charges; e) charges arising from legally obligatory valuations of real estate properties; f) charges for legally required audits of the accounts of the funds; g) supervisory fees; h) other costs. 2. The costs mentioned in subparagraphs d) and e) of the preceding paragraph may only be attributed to the funds for transactions which are, in relation to the funds, completed. 30

Section V Coverage of Risks Article 13 Derivatives 1. The management entities of real estate investment funds may use derivatives in order to hedge the risk of the fund assets which are managed by said entities. 2. Derivatives traded in regulated markets or outside regulated markets are admissible provided that their underlying assets and maturities correspond to the nature of the assets and liabilities held by the funds. 3. Based on a justified application by the management entity, the CMVM may authorise the use of other types of derivatives. Article 14 Limits 1. The exposure resulting from the underlying assets of the derivatives may not be greater than the net asset value of the fund. 2. Whenever derivatives traded outside a regulated market are used, the fund may not, in relation to each counterparty, present an exposure greater than one-third of its net asset value, measured in terms of the preceding paragraph. Chapter IV Valuation of Real Estate Section I Valuation Methods and Reports Article 15 Objective of the Valuation The valuation of a real estate should be carried out with the aim of providing the management entity and unit-holders with objective and rigorous information in relation to the best price which could be obtained if the real estate were sold at the moment of valuation, under normal market conditions. 31

Article 16 Methods of Valuation 1. Real estate appraisers should use at least two of the following methods of valuation: a) The comparative method; b) The yield method; c) The cost method. 2. Whenever special circumstances do not permit adequate determination of the value of the real estate, the real estate appraiser should give grounds, in the valuation report, for the reasons which led him to exclude the methods mentioned in the preceding paragraph, and also the reasons which justify his choice of another method of valuation. 3. Without prejudice to the preceding paragraph the real estate appraiser should present, in the valuation report, the value of the real estate property which would result if the methods specified in paragraph 1 had been adopted. Article 17 Reserves 1. Whenever significant information or details which could influence the determination of the value of the real estate property are inaccessible to or have not been made available to the real estate appraiser, the real estate appraiser should describe, in the valuation report, the limitations of the final amount proposed. 2. Without prejudice to the preceding paragraph, if the value resulting from the application of the methods referred to in paragraph 1 of the preceding Article differs significantly from that which results from the application of the indicators or indices available in the real estate market, the real estate appraiser should issue an opinion on the reasons for these differences. Article 18 Valuation Reports 1. Without prejudice to the following paragraph, valuation reports should be prepared with regard for the requirements of content and structure contained in Appendix III. 2. The CMVM is to be notified in advance of the use of valuation reports drawn up by a foreign appraiser who is subject to control of qualification in his Home Member State. Within 15 days from said notification, the CMVM may raise an objection thereto. 32

3. A management entity should send to the CMVM the valuation reports which, in relation to a single real estate and moment of valuation, present a difference of values between them in excess of 20% of the lowest value. 4. Real estate appraisers should send to the CMVM those valuation reports which contain reservations. Section II Valuers Article 19 Notification and Certification 1. The real estate appraisers of real estate investment funds should notify the CMVM in advance of the commencement of business. 2. The notification referred to in the preceding paragraph should include the following updated details: a) document proving certification; b) document proving professional qualifications; c) copy of identity card; d) copy of third party liability policy relating to exercise of the activity; e) Questionnaire drawn up by the CMVM and filled in by the person concerned and including at least the following details: i. name, address, nationality and taxpayer number; ii. full description of professional situation and experience, specifically the type of contractual relationship with the management entity, the previous professional activities and professional and academic qualifications; iii. information which makes it possible to deduce the applicant s status in regard to probity, especially in relation to any convictions in any criminal, misdemeanour or disciplinary proceedings. 3. The public liability policy shall have a minimum value of 250,000 per real estate appraiser. A copy of each new policy or document supporting the update or renewal of a previous policy shall be submitted to the CMVM within 15 days of the issuance thereof. 4. The certification referred to in paragraph 2/a) requires the achievement of a pass grade in a course organised by entities that are duly authorised by the CMVM and prove themselves to be of reliable status and to have adequate technical, material and human resources to administer the training and qualification of applicants for registration as real estate investment fund real estate appraisers. 5. The application for authorisation referred to in the preceding paragraph should be accompanied by the following details: a) name or firm; 33