CVM Orienting Opinion 32

CVM ORIENTING OPINION NO. 32, OF SEPTEMBER 30, 2005.
Use of the Internet in securities offerings and in the intermediation of transactions.

This orienting opinion aims to clarify the understanding of the Securities and Exchange Commission (Comissão de Valores Mobiliários) regarding the characterization (i) of a distribution offering of securities as public, when the Internet is used as a means of communication, based on the interpretation of art. 19, §3º, III of Law No. 6,385/76, and (ii) of the exercise of activity subject to authorization by the Securities and Exchange Commission, when the activity is carried out through the Internet, in accordance with art. 16 of the same law.

The problem of using the Internet in the securities market relates directly to the making of offerings of securities issued in other countries and the provision of securities trading services to persons resident in Brazil by foreign intermediaries. In addition, the use of the Internet also affects offerings and activities in the securities market carried out entirely in Brazil, by local agents.

It should be noted, furthermore, that the offering of securities issued in other countries and the intermediation of securities with persons resident in Brazil, by foreign intermediaries, even if they do not use the Internet, may still be subject to authorization by the Securities and Exchange Commission.

For these reasons, this Commission decided to treat the use of the Internet and the registration of offerings and intermediaries separately, in orienting opinions issued on the same date (in addition to this Orienting Opinion, No. 33/05).

These two opinions must be read together whenever one intends to understand the understanding of this Autarchy regarding offerings of securities and the exercise of activities subject to authorization by the Securities and Exchange Commission itself, when the Internet is used as a means of communication (i) between an intermediary located abroad and investors resident, domiciled, or incorporated in Brazil, or (ii) for the offering of a security issued abroad to those investors.

1. Public Offering of Distribution of Securities and Internet.
   The use of the Internet as a means to publicize the offering of securities characterizes such offering, as a rule, as public, in accordance with item III of § 3º of art. 19 of Law No. 6,385/76, since the Internet allows indiscriminate access to the information disseminated through it. This understanding is already contained, in fact, in art. 3º, IV, of Instruction 400/05.

Thus, unless preventive measures are taken or special situations are verified, it is necessary to have prior registration of such offerings with the Securities and Exchange Commission, in accordance with the caput of article 19 of Law No. 6,385/76.

Among the preventive measures and special situations that can be taken into consideration to decharacterize the distribution offering of securities made through the Internet as public are the following:
a. effective measures taken by the sponsor of the Internet page – information provider – to prevent the general public from having access to the content of the page; b. absence of dissemination of the page to the public by the sponsor of the internet page through unsolicited electronic mail, in search engines, discussion rooms, through advertising on Internet pages or magazines, etc.; and
c. existence of direct or indirect, but sufficiently clear, indication that the page was not created for the general public.

It is not necessary for all the factors listed above to coexist to decharacterize as public the offering of securities carried out through the Internet. Other factors, not expressly mentioned above, may be necessary for the offering to be considered as public.
The Securities and Exchange Commission will determine the configuration as public of the offering of securities made through the Internet, based on the analysis of the specific case.

2. Exercise of Activity Subject to Authorization by the Securities and Exchange Commission and Internet.
   In the same line, the use of the Internet for mediation or brokerage of transactions with securities, distribution of issuances in the market, or for the exercise of the activity of acquiring securities to resell them on one's own account (items I to III of art. 16 of Law 6,385/76) depends on prior authorization by the Securities and Exchange Commission for the exercise of the activity.

Approved by the Collegiate Body in a meeting on September 28, 2005.
Original signed by
MARCELO FERNANDEZ TRINDADE
President