 | Online investing has been spreading fast in Western countries and now it’s gearing shifts also in Asia. However not much has happened in Latin America, although Crowd Valley has always recorded in its researches a small but significant demand for online investing services coming from that area. Nevertheless South America is home to some very promising countries, with thriving entrepreneurial ecosystems. One of this is Brazil. |
The online investing market in Brazil is limited to a few players. However, recently, local stakeholders have started a dialogue with the relevant authorities to raise awareness on the potential of online investing and demand ad hoc regulations.
The current legal framework for online investing
The small but growing online investing sector in Brazil has so far been operating within the existing legal framework, in particular under Comissão de Valores Mobiliários (CVM— Brazil’s Securities and Exchange Commission) Instruction 400 (2003), which regulates public offerings in the country. Several exemptions within this rule, in fact, allow SMEs (defined as firms with annual turnover of 3.6 million real, or $1 million) to forego some registration requirements. This legislation does not pose any cap on investment, neither for professional investors nor for retails investors. The only limits are the fact that the issuers can raise maximum 2.4 million real ($690,000) per year and that before they launch their campaign they need to pre-notify CVM of the upcoming offer, which means filing certain documents with the regulator to get its permission to publish the offer.
Moving forward
Since the beginning of the year, the local stakeholders have been discussing with CMV the possibility to create an ad-hoc legislations for equity crowdfunding. Although no official documents have been published yet, rumors say that CMV is likely to limit investments up to ten percent, in aggregate, of individuals’ total financial investments or their annual income, whichever is higher. Another possibility that is being discussed is that CMV puts more stringent requirements on the documents that issuers have to present, asking for example to publish financial audits, which would certainly make the process more burdensome for the fundraisers.
Nevertheless, we won’t exactly know how Brazil will act about online investing until next year at the earliest, when CMV is supposed to release a public consultation. In a positive light the local online investing sector has started a discussion with the authority, which means that it recognizes the potential of the market and the importance of taking actions.
References
A. Root (2015). A Look at Equity Crowdfunding Regulations in Brazil. Crowdsourcing.org
The current legal framework for online investing
The small but growing online investing sector in Brazil has so far been operating within the existing legal framework, in particular under Comissão de Valores Mobiliários (CVM— Brazil’s Securities and Exchange Commission) Instruction 400 (2003), which regulates public offerings in the country. Several exemptions within this rule, in fact, allow SMEs (defined as firms with annual turnover of 3.6 million real, or $1 million) to forego some registration requirements. This legislation does not pose any cap on investment, neither for professional investors nor for retails investors. The only limits are the fact that the issuers can raise maximum 2.4 million real ($690,000) per year and that before they launch their campaign they need to pre-notify CVM of the upcoming offer, which means filing certain documents with the regulator to get its permission to publish the offer.
Moving forward
Since the beginning of the year, the local stakeholders have been discussing with CMV the possibility to create an ad-hoc legislations for equity crowdfunding. Although no official documents have been published yet, rumors say that CMV is likely to limit investments up to ten percent, in aggregate, of individuals’ total financial investments or their annual income, whichever is higher. Another possibility that is being discussed is that CMV puts more stringent requirements on the documents that issuers have to present, asking for example to publish financial audits, which would certainly make the process more burdensome for the fundraisers.
Nevertheless, we won’t exactly know how Brazil will act about online investing until next year at the earliest, when CMV is supposed to release a public consultation. In a positive light the local online investing sector has started a discussion with the authority, which means that it recognizes the potential of the market and the importance of taking actions.
References
A. Root (2015). A Look at Equity Crowdfunding Regulations in Brazil. Crowdsourcing.org
 | About the author - Irene Tordera Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives. During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem. |
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