CVM submits the changes to the Instruction No. 409 to public hearing
The Brazilian Securities and Exchange Commission submitted the instruction draft that changes ICVM No. 409, as of August 18th, 2004, to public hearing with the objective of “enhancing the regulatory environment so that smaller companies can have access to the capital market and be able to finance themselves by means of public issues of shares.”
The changes included in the draft submitted to public hearing reflect the proposals prepared by Comitê Técnico de Ofertas Menores (“Technical Committee of Smaller Offers”), which counts on the participation of several entities from the sector and was established with the objective of discussing the topic and presenting its conclusions to CVM aimed to foster an active market for smaller companies and make the creation of channels of investments adequate to the specific characteristics of these companies feasible.
In this sense, the draft proposes the identification of channels as “Fundos de Ações – Mercado de Acesso” (“Stock Funds – Access Market”) when they adopt for a policy that determines the investment of at least two thirds of their shareholders’ equity in shares of companies listed under this category (“mercado de acesso”). The draft also proposes that these funds are allowed to adopt mechanisms to be able to deal with shares with these specific characteristics, notably lower liquidity, and that participate in the process of, as called by CVM, “maturation of these companies.” The proposal also expects that these funds, established under the form of closed joint ownerships, can invest up to one third of their shareholders’ equity in close corporations. To this end, they must interfere in the management of these companies in the same way that is required from private equity investment funds.
In a notice, CVM stated that “the intention is to allow that such funds are able to follow the progress of companies that have not gone public yet, but intend or have the potential to go public in the years to come.”
Amec acknowledges and supports CVM’s initiative that, through the proposal of changes to Instruction 409, seeks to drive the funds industry, making the rules for “Fundos de Ações – Mercado de Acesso” more flexible and, therefore, making investment funding by smaller companies, even close corporations, feasible. It is also important to highlight that the changes proposed encourage the creation of such funds, allowing managers to contract variable remunerations. http://www.cvm.gov.br/port/audi/ed1313sdm.pdf
