Circular Letter CVM/SMI 02/17

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL (CVM) Rua Sete de Setembro, 111 27th floor Center Neighborhood Rio de Janeiro/RJ CEP 20050901 Telephone: (21)35548303 www.cvm.gov.br Circular Letter No. 2/2017/CVM/SMI Rio de Janeiro, August 21, 2017.
To
Administrators responsible for electronic investment platform activities (Crowdfunding) (CVM Instruction No. 588/17) Subject: Guidelines on:
(i) the registration application for an electronic crowdfunding investment platform; and (ii) the submission of an annual report with offers made

Dear Administrator,

This Circular Letter aims to guide the submission to the CVM (i) of the registration application for the electronic platform (Articles 13 and 14), as well as (ii) the report with offers made (Art. 27, item II), as required by CVM Instruction No. 588, July 13, 2017 (“ICVM No. 588/17”), which regulates the public distribution offer of securities issued by small-sized business corporations, carried out with exemption from registration through an electronic crowdfunding investment platform (“electronic platforms”).

ICVM No. 588/17 regulates the organization, operation, and activities of electronic crowdfunding investment platforms, legal entities to whom exclusively belongs the intermediation of public distribution offers of securities exempt from registration, as provided in the aforementioned Instruction.

(i) Of the electronic platform registration application

The applicant must submit the registration application to this Agency in accordance with Chapter IV of the aforementioned norm, which must be formulated by the administrator responsible for the activities of the electronic crowdfunding investment platform, by presenting a petition accompanied by the documents described in Annex 14 of ICVM No. 588/17, which must be sent to the Superintendence of Market Relations and Intermediaries – SMI.

(i.1) Of investor registration data

Among the requirements for registration, it should be highlighted that the electronic platform has the duty to identify the investor, in accordance with Art. 13, § 1st, item II, letter ‘a’, of ICVM No. 588/17.
To this end, it is required that the electronic platform obtain the following minimum information from each investor: (a) full name; (b) CPF (Individual Taxpayer Registry); (c) address; and (d) electronic address, in line with Art. 19, item III, letter ‘a’, as well as, if applicable, (e) declaration of qualified investor status and (f) declaration by the investor regarding their gross annual income or their amount of financial investments, to comply with Art. 4, items II and III, respectively (Annexes 4-A and 4-B of ICVM No. 588/17).

These are minimum information requirements, as the electronic platform must have a code of conduct that includes rules, procedures, and internal controls that allow for the identification, analysis, and mitigation of risks and practices of money laundering or concealment of assets, rights, and values, and terrorist financing, as stipulated by Art. 13, § 1st, item III, letter ‘c’, of ICVM No. 588/17.

It is expected, therefore, that rules, procedures, and internal controls are in consonance with CVM Instruction No. 301/99, Art. 3rd-A, items I and VI, and Art. 3rd-B, item I, and are effective for the identification of (a) final beneficiaries; (b) persons considered politically exposed; and (c) the origin of resources contributed by investors, including those identified as politically exposed persons.

(i.2) Of certification recognized in information technology audit

It should be highlighted that, among the documents required for the registration of the electronic platform, there is the opinion of an independent auditor with certification recognized in information technology audit (Annex 14, Art. 1st, sole paragraph, of ICVM No. 588/17). To this end, detailed information regarding the certification in question must be included in the presented documents.

In this sense, reference is made to the "CISA" certification (more details available at: http://www.isaca.org/Certification/CISA-Certified-Information-SystemsAuditor/Pages/default.aspx), whereby other certifications, proven to be of equivalent level and recognized, may also be evaluated.

(i.3) Of updating the electronic platform registration data

Another document that must be mentioned is the registration information form (Annex 14, Art. 1st, item X, of ICVM No. 588/17), which must meet the requirements of item XXXVI of Annex 2 of CVM Instruction No. 510/11: XXXVI - REGISTRATION INFORMATION RELATING TO THE ELECTRONIC CROWDFUNDING INVESTMENT PLATFORM, this form must be updated within 7 (seven) business days, counted from the event that caused the alteration, as well as be validated between May 1st and May 31st of each year, in accordance with, respectively, items I and II, of Art. 1st, of CVM Instruction No. 510/11.

(i.4) Of sending documents for electronic platform registration

The submission of the aforementioned documents, which will accompany the registration application, can be carried out in two ways: (a) remotely, via the CVM Portal, or (b) in person, via the Protocol Service, offered at the Agency's headquarters in the city of Rio de Janeiro, as well as in the Regional offices, in the cities of São Paulo and Brasília (in http://www.cvm.gov.br/menu/acesso_informacao/institucional/contato/contato.html).

If the CVM Portal is chosen, one must access the “Citizen Service - SAC” (in http://sistemas.cvm.gov.br/?SAC), available in the “Highlights” section of the home page, a service limited to the sending of 10 files, not exceeding 15 MB (fifteen megabytes) in total, per service request.

The administrator responsible for the activities of the electronic crowdfunding investment platform must be registered in the “CVMWeb” system. To do so, they must select the “CVMWeb Login” option in the side menu of the page, select the “Register” option, enter the CPF, fill in all fields of the form, and finalize the operation.

Once registered, return to the SAC page, select the “CVMWeb Login” option in the side menu of the page, enter CPF and password, and click “Login”.

Next, select the SAC option, and then the “New Inquiry / Complaint / Document Protocol” option. More details available at: http://www.cvm.gov.br/export/sites/cvm/menu/atendimento/manual_protocolo_digital.pdf.

Finally, select the type of service: “Document Protocol”, the destination area of the document: “SMI - Superintendence of Market Relations and Intermediaries”, and write the following message: “Documents for the Instruction of the Electronic Crowdfunding Investment Platform Registration Application – Annex 14 of ICVM No. 588/17”.

(ii) Of the submission of a report with offers made

Until the implementation by the CVM of a specific electronic system, as indicated by Art. 27, caput, of ICVM No. 588/17, the submission of the annual report with offers made (by March 1st of each year, containing the information described in Annex 27-II of ICVM No. 588/17) must be carried out via the CVM Portal, through the aforementioned “Citizen Service - SAC”.

Repeat the steps described in items 12 to 15 above, and then select the type of service: “Document Protocol”, the destination area of the document: “SMI - Superintendence of Market Relations and Intermediaries”, and write the following message: “Report with Offers Made – Annex 27-II of ICVM No. 588/17”.

(iii) Of final considerations

The documents necessary for the registration of the electronic platform and the annual report of offers must be submitted in PDF (Portable Document Format) format, non-editable and searchable (text format).

It is alerted that, in accordance with Art. 47 of ICVM No. 588/17, the electronic platform is subject to a daily fine in the amount of R$ 500.00, due to non-compliance with the deadline, provided for in Art. 27, item II, for the submission of the annual report with offers made, without prejudice to the provisions of Art. 11 of Law No. 6.385, of December 7, 1976.

Finally, further clarification related to the terms of this Circular Letter may be obtained by contacting this Superintendence, including via the electronic address smi@cvm.gov.br.

Sincerely,

Document electronically signed by Francisco José Bastos Santos, Superintendent, on 08/21/2017, at 12:57, in accordance with Art. 1st, III, "b", of Law 11.419/2006.
The authenticity of the document can be verified on the site https://sei.cvm.gov.br/conferir_autenticidade, by informing the verification code 0343049 and the CRC code 4127C34A.
This document's authenticity can be verified by accessing https://sei.cvm.gov.br/conferir_autenticidade, and typing the "Verification Code" 0343049 and the "CRC Code" 4127C34A.
Reference: Process No. 19957.007871/201730 SEI Document No. 0343049