The Brazilian Securities and Exchange Commission (CVM) initiated, last Wednesday (24), a public consultation proposing a new rule to replace CVM Resolution 88, which governs investment crowdfunding. CVM President, Otto Lobo, highlighted that among the innovations is the advancement of the agenda for asset tokenization. The new rule fully replaces Resolution 88.
Furthermore, he emphasized, in a statement, the opening to new issuers linked to agribusiness, “strengthening this important economic sector’s access to the capital market.” The issue of agribusiness and the disclosure of the consultation this week were anticipated yesterday (23) by Blocknews. The consultation period runs until December 23rd.
According to the President, the successful experience of investment crowdfunding, which has been in place since 2017, “allows us to expand it safely and with protection for investors.” The resolution regulates public offerings for the distribution of securities issued by small businesses, including tokens, with a waiver of registration through electronic participatory investment platforms.
Key Changes and Highlights of the Proposed Rule
- Expansion of Eligible Issuers and Instruments: Inclusion of securitization companies registered with the CVM, rural producers as natural persons, and agricultural cooperatives, in addition to the suppression of the revenue limit for unregistered business entities.
- New Fundraising Limits: A ceiling of R$25 million for business entities and agricultural cooperatives, R$50 million for securitization companies, and R$2.5 million per harvest for rural producers.
- Investor Investment Limits and Capital Recomposition: Conversion of the global investment limit into a limit per platform and the inclusion of the possibility to reinvest amounts received in the same calendar year without counting toward the annual limit.
- Adaptations in Offering Procedures: Adjustments to lock-up rules, definition of minimum and maximum fundraising values, and flexibility of the additional lot in certain offerings.
- Distribution for Account and Order: Possibility of integration between crowdfunding platforms and traditional institutions within the securities distribution system.
- Advancements in the Subsequent Transactions Environment: Possibility of securities repurchase by issuers and revision of the concept of an “active investor.”
- Enhanced Transparency: Creation of specific informational annexes for each type of issuer, in addition to the requirement for platform performance indicators.
- Diversification of Retail Investments: Strengthening of the participatory investment syndicate, with the possibility of prior commitment of funds to theses led by leading investors, registered as managers.
- Adaptation Period: Establishment of transitional rules, especially for already active securitization companies, which will have a period to apply for registration with the CVM without interrupting their offerings.
The New CVM Resolution 88
“Investment crowdfunding was created to support small companies and startups, but it has expanded to new issuers and instruments. This consultation seeks to modernize the regime, based on dialogue and contributions received, addressing fundamental topics such as the insertion of agribusiness into the capital market, the integration of platforms with the traditional distribution system, and the necessary adaptation to securitization operations,” added Antonio Berwanger, Superintendent of Market Development (SDM) at CVM.
The draft of the new standard aims to modernize and broaden the investment crowdfunding regime. “The proposal seeks to adapt it to the recent evolution of the market, marked by the growth of securitization operations and the gradual insertion of agribusiness into the capital market,” said the CVM.
Furthermore, it seeks to adapt the offering rules and procedures to accommodate the characteristics of these new issuers and types of instruments, while still preserving the principles of proportionality, simplicity, and investor protection that characterize the regime.
The public consultation also includes “Draft B,” with accessory and complementary adjustments to the main proposal, “Draft A.”
The text of the public notice follows below.
