2019 or 1984?

When I read the news that the restricted public offers of shares and debentures, which are regulated by Instruction CVM 476/2009, must be registered with the Brazilian Association of Capital and Finance Market EntitiesANBIMA) as from June 2019, I could not help but think about the character of Winston Smith created by George Oewell, in the classic book “1984”.  In the fiction created by Orwell, there are many televisions monitoring and controlling the population, and no citizen has the right to privacy in a government ruled by a dictator called the “Big Brother”.
Those who saw the launching of ICVM 476 and participated in the first offeris under its rules, such as I did, must be with the same bitter taste that Winston had when read in the billboards he passed by: “The Big Brother is watching you”.
At the time ICVM 476 was launched, there was no need for the issuer to disclose the issuer’s audit financial statements for the previous years prior to the offer, nor of the prohibition of replacing the lead arranger or of the impossibility to changing the type, series or class of securities offered, nor of a maximum period for the conclusion of the restricted offer. Companies of all sizes used ICVM 476 to quickly and easily fund themselves in the market.
The need to register the restricted offers of shares and debentures with Anbima, an obligation that until now was only for the offers of securities for the general publicICVM 400), is one of several changes that ICVM 476 has been suffering in recent months. All of them, it is worth noting, in the path of greater control by the regulators, especially the CVM.
Those who have followed ICVM 476 since birth must have a look of admiration for it. In a highly bureaucratic and controlling country, the “free, light and loose” ICVM 476 quickly captured the market’s attention. In 2018, less than a decade of its edition, there were 959 restricted efforts in the country, with a funding volume of R$ 238 billion.
Meanwhile, the public offerings of its big sister – ICVM 400, have shrunk significantly in recent years from 137 issues with a volume of R$ 54 billion in 2012 to 76 issues and R$ 33 billion in 2018.
Given these figures, the CVM and ANBIMA were expected to assume a position of the “Big Brother” before the prodigal son. And we must recognize that much of the changes made were to give more security and information to investors, allowing them to make investment decisions more consciously. What we are seeing is the maturation of ICVM 476 through greater regulation. Still, it is inevitable the feeling of being watched, especially for those who felt the fresh air of freedom from the early years of the instruction. Let’s see how these new rules will shape the restricted offerings in the country.
By Renata Simon, partner at Candido Martins Advogados