CVM enacted in 13th July 2017 Regulation 588, which regulates the public offering of securities issued by small companies through electronic platform - Crowdfunding.

The new rule enables companies with annual revenues of up to BLR 10 million to offer public cooperative financing on the internet without going through all the mandatory formalities before CVM for a public offering. The offering, or its advertising material, may not be distributed outside the digital environment.

The investment is limited to BLR 5 million per year, with underwriting periods of no longer than 180 days, which may be reached through one or more offers during the same calendar year, provided there is a distance of 120 days between them. Moreover, an investor has an annual investment in securities limited to BLR 10,000.00, except for (i) those that are deemed qualified investors; (ii) those deemed angel investors acting as leading investors; and (iii) those who hold a gross annual revenue or financial investments higher than BLR 100,000.00, in which case the above limit may be increased in up to 10% of the higher of these amounts.

The investor is also entitled to a period of at least 7 days counted from the confirmation of the investment to revoke its investment order. Once the offer is terminated, the Platform shall have 5 business days to take all the steps so that the amount is invested in the small business or returned to the investors.

The disclosure of the information concerning the offer must occur in an equitable manner to the public of the offer. Therefore, CVM Regulation 588 contains a minimum list of material information to be disclosed by the issuer, in Portuguese, in a webpage.

For protection of the investors, one main conditions is that the offer must be made through authorized and supervised Platforms.

The Platforms perform a gatekeeper function, assuming a set of responsibilities before the investors and the CVM. The Platforms shall take every precaution and act with high diligence standards in order to assure that the information provided by the issuer is truthful, consistent, correct and sufficient, enabling the investor to make an adequate investment decision. Platforms that have already performed at least one public offering of securities without the need of previous registration with the CVM will have 120 days to request the authorization for rendering of services under the new rule.

It is important to point out that a well regulated market for Crowdfunding is strategic for the increase and improvement of funding methods to small and recently incorporated companies with restricted access to credit and other sources of financing, which is also vital for the development of jobs and income in the Brazilian economy.

For more information, please contact our partners in Corporate Law by e-mail:;;

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.