Third-party investment in small companies is a controversial matter in Brazil, and has gone largely unregulated. Or at least that was the case until July 2017, when the securities watchdog CVM issued Instruction No. 588 to regulate the raising of funds through investment crowdfunding. The Instruction’s objective is to outline the ways in which companies are able to attract investments through online platforms. Crowdfunding allows companies, startups in particular, to publicly offer shares or quotas in exchange for capital to streamline their businesses.
CVM’s Instruction No. 588 opens the possibility for small companies to hold a public offering of securities (shares) – with no need to go public by registration in the stock...
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