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notícias A nice portrait of corporate governance in Brazil

A nice portrait of corporate governance in Brazil

Petrobras is the biggest public state company of Brazil. Its shares are listed  in Bovespa, NYSE and Latibex (Spain). In 19th March, during Petrobras annual ordinary shareholder meeting, Brazil´s government elected Petrobras’ board members that they have right as controller. According to Brazilian corporate law, preferred shareholders have the right to elect one board member. Even more, according to Petrobras bylaws, ordinary minorities shareholders also have rights to elect one board member. Minorities also have the same right to elect one board member for the audit committee.

For the first time in the Petrobras’ history, minorities leaded by independent investors tried to elect their own board members. They almost could. They gathered enough shares to go to the meeting with reasonable certainty that it should work. Amazingly, they were defeated. To elect also the minorities board, government used shares hold by BNDESpar (whole owned subsidiary of BNDES, the Brazilian Government development bank) and public pension funds, such as PREVI (pension fund of Banco do Brasil), Petros (pension fund of Petrobras) and Funcef (pension fund of CEF) as “minority” shares.

Despite the frustration of losing, Petrobras minorities understood it was the first and important step to change this incredible situation. In Brazil, is hard to attract minorities to participate in shareholder’s meetings, especially in companies with the size of Petrobras, which has shareholders spread across the country and abroad. Although Brazil´s SEC recently gave permission to run shareholders meetings by Internet, this issue is new both to investors and companies.

Is worth remembering: in 2010 Petrobras proceeded other questionable action that injured minorities shareholders interests, its capitalization. In this deal, the government did a large increase of capital using treasury reserves to subscribe for their part where, as common investors, they had to put money. More than this, they did themselves the evaluation of the company. This resulted in a large increase of government’s participation in the company and diluted the minorities participation.


By Transparência & Governança


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