Brazilian firms made important changes in terms of corporate governance during the last year. Kevin McDonald, Editor of The McDonald Lehner Report posts what he believes to be a list of the “Top 10 Events.” The article was published last week in Brazil (Investimentos e Notícias) and will appear this week in Chile (América Economía).
The events fall into the broad categories of disclosure, compensation, electing management and supervising management. Many of the issues will be familiar with those concerned with corporate governance in the US and around the world.
I found McDonald’s discussion of cumulative voting of particular interest.
General Shopping saw a rare and valuable use of cumulative (multiple, or weighted) voting for directors. In this form of voting, shareholders vote for individual candidates, not a slate as a whole, and they can cast all of their votes for a single candidate. As a result, the minority can usually win at least one board seat. Cumulative voting is rarely seen in Brasil due to the threshold of 15% of voting shares required to impose this voting procedure. At the annual general meeting on April 25, the controlling shareholders nominated and elected six directors; but minority shareholders nominated and elected two additional directors who are excellent and independent. This example should inspire other minority investors to organize cumulative voting.
Catch up with corporate governance in Brazil and around the world at the 2012 ICGN Annual Conference in Rio de Janeiro, Brazil, 25- 27 June.