post

Articles 14/12/2022

Natural Selection

Just like other living beings, companies also go through an evolutionary process of natural selection and adaptation. Thus, their most advantageous characteristics, that is, those that increase their probability of survival and growth in a competitive environment, are readily sanctioned by the market, guaranteeing their success.

For this reason, over the past few decades the good corporate governance practices framework, namely, the system by which companies are administrated, has consolidated, based on transparency, equity, accounting and corporate responsibility, and norms and processes have been adopted guaranteeing company compliance.

Due to their juridical nature, which presupposes the conjugation of public and private capital, mixed-capital companies, although having the State as their controlling shareholder, should also submit to these principles, evidently limiting the active involvement of the Public Administration.

Experience denotes, equally, that market activity – in particular, the growing proactivity of minority shareholders – has played an important role in discouraging and rectifying potential abuses.

To ignore such obligations results in important consequences, as was seen in the case of Petrobras, which, inclusively, was compelled to indemnify its shareholders holding its shares traded abroad via a billion-dollar settlement for reason of abuses it had committed over decades and revealed within the ambit of Operation Lava Jato.

Since then, a lot has changed, the corporate world has evolved, and we have achieved a consensus as to the necessity of observing good corporate governance practices in these companies.    

Such inexorable evolutive tendency is reflected inclusively in the key relevant legislation, namely Law 13.303/16, which introduced the statutory law applicable to mixed capital companies and their subsidiaries, expressly establishing the necessity of observing the rules of corporate governance, transparency and structure, the practices of risk management and internal control, board of director composition and likewise mechanisms for the protection of minority shareholders.

We have evolved collectively and, evermore, possible undue interference by the State as the controlling interest of said companies becomes anachronistic and unacceptable.

The World has changed, Brazil has changed, and the markets too have changed, such that the expectation is, at this time of political renovation, that the Brazilian State effectively proves that it has accompanied this natural evolution.

André de Almeida, CEO and Founding Partner of Almeida Advogados.

SEE ALL ARTICLES SEE ALL ARTICLES