By: André Jerusalem

On April 27, 2022, the Brazilian Securities and Exchange Commission (“CVM”) published CVM Resolution 88, which substantially modifies the rules regarding public offerings of small companies.

The new resolution seeks to facilitate and improve the current rules for crowdfunding, which is a method of raising funds through collective investments in small businesses. The main changes consist of increasing the fundraising ceiling, which will increase from R$5 million to R$15 million per offering. Additionally, the resolution also provides for:

• Extension of the annual gross revenue limits used to define a small business corporation from R$ 30 and R$ 60 million, individual and consolidated limit, to R$ 40 to R$ 80 million, respectively.
• Need to provide transparency regarding the remuneration of people hired to promote the disclosure of public offerings, when dealing with agents regulated by the CVM.
• Modulation of the requirement for a registrar, making it mandatory to hire a registrar in specific cases, and small businesses may choose to hire the platform that distributed the public offering to provide ownership and shareholding control services, as defined in CVM Resolution 88.
• Establishment of a transitional rule for compliance with the minimum share capital requirement for platforms that are already registered and inclusion of two hypotheses for cancellation of registration related to the absence of public offerings by the platform.
• Requirement for small companies to submit financial statements audited by an auditor registered with the CVM in two cases: (i) offers whose maximum target fundraising value exceeds R$10 million; and (ii) small business companies with consolidated annual gross revenue exceeding R$10 million.
• Amendment to the proposal that made the allocation of the offering resources more flexible to prevent the acquisition of minority interests in other companies.
• Increase of additional lot from up to 20% to up to 25% of maximum target value.
• Maintaining the seal so that resources can pass through the platform accounts.
• Creation of mandatory percentage bands for the participation of the lead investor in the small business corporation depending on the amount of the offer.
• Permission for the lead investor to receive other types of remuneration, as long as they are not paid by the investor.