> For the complete documentation index, see [llms.txt](https://www.opensourcelaw.com.br/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://www.opensourcelaw.com.br/en/regulation/1.-cvm/1.3.-cvm-resolution-no.-88-2022.md).

# 1.3. CVM Resolution No. 88/2022

Provides for exemption from registration through an electronic participatory investment platform.

The document is important, as projects that issue tokens with the legal nature of securities may fall within this exemption, in which case they will not need to register with the Securities and Exchange Commission.

The intermediation of public offerings of securities distribution exempt from registration is the exclusive activity of an electronic participatory investment platform registered with the CVM.

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The issuance of tokens by small business companies is exempt from registration with the CVM, but <mark style="background-color:purple;">the electronic participatory investment platform will need to obtain prior registration to operate</mark>.
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The financing raised through pages on the worldwide web, a program, application, or electronic means is not considered a public offering of securities, <mark style="background-color:purple;">when it involves a donation, or when the return of the capital received occurs through:</mark>

* gifts and rewards; or
* goods and services.

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Utility tokens fall within the above cases and are not considered securities.
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## Definitions:

* Investment crowdfunding: raising funds through a public offering of <mark style="background-color:purple;">distribution of securities exempt from registration</mark>, carried out by issuers considered small business companies, and distributed exclusively through an electronic participatory investment platform;
* Lead investor: investor with proven prior experience in leading investment rounds, <mark style="background-color:purple;">and may not hold, whether through direct ownership or convertible securities, a stake greater than 20% (twenty percent) of the share capital of the small business company that is the subject of the public offering</mark>, nor have been convicted of bankruptcy fraud, malfeasance, bribery, extortion, embezzlement, money laundering or concealment of assets, rights and funds, against the popular economy, economic order, consumer relations, public faith or public property, the national financial system, or a criminal penalty that prohibits, even temporarily, access to public office, by a final and unappealable decision, except in the case of rehabilitation, and not having suffered, in the last 5 (five) years, a penalty as a result of activity subject to the control and supervision of the CVM, the Central Bank of Brazil, the Private Insurance Superintendence – SUSEP or the National Supplementary Pension Superintendence – PREVIC;
* Electronic participatory investment platform: legal entity duly incorporated in Brazil and <mark style="background-color:purple;">registered with the CVM</mark> to professionally carry out the activity of distributing public offerings of securities issued by small business companies;
* Small business company: <mark style="background-color:purple;">business company incorporated in Brazil</mark>, not registered as an issuer of securities with the CVM, and <mark style="background-color:purple;">with annual gross revenue, as determined in the fiscal year ended in the year prior to the offering, of up to R$ 40,000,000.00 (forty million reais)</mark>.

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If the small business company is controlled by another legal entity or by an investment fund, the consolidated annual gross revenue of the set of entities under common control may not exceed R$ 80,000,000.00 (eighty million reais) in the fiscal year ended in the year prior to the offering.
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## Requirements:

* existence of <mark style="background-color:purple;">maximum fundraising target not exceeding R$ 15,000,000.00 (fifteen million reais)</mark>, and a fundraising period of no more than 180 (one hundred and eighty) days;
* <mark style="background-color:purple;">guarantee to the investor a withdrawal period of at least 5 (five) days counted from the confirmation of the investment</mark>;
* the issuer must be <mark style="background-color:purple;">a small business company</mark>;
* the funds raised by the small business company may not be used for: a) the direct acquisition, or through convertible securities, of a minority stake in other companies; and b) the granting of credit to other companies;
* the total amount invested by an investor in securities offered with exemption from registration is <mark style="background-color:purple;">limited to R$ 20,000.00 (twenty thousand reais) per calendar year</mark>, except in the case of a lead investor, a qualified investor, or one whose annual gross income or amount of financial investments exceeds R$ 200,000.00 (two hundred thousand reais).

For the purpose of obtaining and maintaining registration with the CVM as an electronic participatory investment platform, the applicant must:

* be a legal entity duly incorporated in Brazil;
* have minimum paid-in share capital of R$ 200,000.00 (two hundred thousand reais);
* have appropriate and verifiable information technology procedures and systems to: a) identify the investor and their qualification, including the retention of investors' declarations; b) register the investor's participation in the offering; c) obtain and ensure retention of the risk acknowledgment form signed by the investor; d) operate the required electronic discussion forums, with the respective sender identification and retention of all messages; e) disclose to investors the information required by this Resolution; f) address investors' complaints; and g) ensure that investments made through the platform are carried out in a segregated manner, so that they do not mix with the assets of: the platform; its partners, managers and related persons; companies controlled by the platform or by its partners, managers and related persons; the lead investor; the partners, managers and persons related to the lead investor, if the latter is a legal entity; companies controlled by the lead investor or by its partners, managers and related persons, if the latter is a legal entity; and the small business company until the close of the offering that reaches the minimum fundraising target;
* prepare a code of conduct applicable to its partners, managers and employees that covers: a) possible conflicts of interest and the terms of participation in offerings carried out by the platform; b) compliance with the legislation and regulations applicable to public offerings of securities; and c) <mark style="background-color:purple;">the rules, procedures and internal controls that allow the identification, analysis and mitigation of risks and practices related to the crimes of money laundering or concealment of assets, rights and funds, and terrorist financing</mark>;
* the platform's managers must: be domiciled in Brazil; have an unblemished reputation; not be disqualified or suspended from holding positions in financial institutions and other entities authorized to operate by the CVM, the Central Bank of Brazil, the Private Insurance Superintendence – SUSEP or the National Supplementary Pension Superintendence – PREVIC; not have been convicted of bankruptcy fraud, malfeasance, bribery, extortion, embezzlement, money laundering or concealment of assets, rights and funds, against the popular economy, economic order, consumer relations, public faith or public property, the national financial system, or of a criminal penalty that prohibits, even temporarily, access to public office, by a final and unappealable decision, except in the case of rehabilitation; not have suffered, in the last 5 (five) years, a penalty as a result of activity subject to the control and supervision of the CVM, the Central Bank of Brazil, the Private Insurance Superintendence – SUSEP or the National Supplementary Pension Superintendence – PREVIC.

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The platform's partners must meet all the requirements applicable to managers, except being domiciled in Brazil.
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## Obligations:

In addition to the requirements to be observed, there are also the following obligations:

* <mark style="background-color:purple;">the electronic platform must verify whether the requirements are being complied with by the projects and by the investors</mark> before issuing the tokens;
* a new offering with exemption from registration by the same small business company, through the same or another platform, is not allowed within 120 (one hundred and twenty) days from the date of closure of the previous offering that was successful;
* the signing of <mark style="background-color:purple;">the accession and risk acknowledgment form</mark> by all investors;
* the provision of minimum information about the offering in a section entitled "ESSENTIAL INFORMATION ABOUT THE PUBLIC OFFERING", and the legal and financial documents relating to each offering in a section entitled "RELEVANT DOCUMENT PACKAGE", before the start of the offering, containing: (i) the articles of association or bylaws of the small business company; (ii) a copy of the debenture deed, title or investment agreement representing the offered security; (iii) the financial statements of the small business company, among other documents relevant to the investment decision;
* the website address with the essential information about the public offering must be kept operational and <mark style="background-color:purple;">available for at least 5 (five) years</mark>;
* the platform must provide a list of the persons hired who are part of the strategy to promote the public offering;
* the small business company must hire a securities registrar registered with the CVM if: (i) at the time of contracting the platform that will distribute the public offering, the small business company has already made, on another platform, one or more public offerings of securities fungible with the subject matter of the offering, convertible into it or convertible into the same class of security; or (ii) if the platform hired to distribute the public offering does not offer title registry and equity participation control services;
* the use of terms that may mislead the investor regarding the existence of organized securities market trading, such as “stock exchange”, “securities exchange”, “exchange market”, “over-the-counter market”, “secondary market”, among others, is prohibited.

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It is up to the electronic platform to verify whether all requirements and obligations are being complied with.
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The small business company, the lead investor and the platform, as well as their partners, managers and employees, are allowed to disclose and promote the offering through contacts, meetings and events, in person or via the worldwide web, provided that: (i) all communications are recorded and verifiable and subject to supervision by the SSE; (ii) there is no confirmation of investment on site or in an electronic environment other than the platform; and (iii) promotion of the public offering under these terms is carried out only from the start of the public offering.
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