A Governança Corporativa das Empresas Brasileiras com Controle Privado Nacional

We provide an overview of the corporate governance practices ofBrazilian public companies, based primarily on an extensive 2005 survey of116 companies. We focus on the 88 responding Brazilian private firms whichare not majority owned by the state or a foreign company. We identify areaswhere Brazilian corporate governance is relatively strong and weak. Boardindependence is an area of weakness: The boards of most Brazilian privatefirms are comprised entirely or almost entirely of insiders orrepresentatives of the controlling family or group. Many firms have zeroindependent directors. At the same time, minority shareholders have legalrights to representation on the boards of many firms, and thisrepresentation is reasonably common. Financial disclosure lags behind worldstandards. Only a minority of firms provide a statement of cash flows orconsolidated financial statements. However, many provide English languagefinancial statements, and an English language version of their website.Audit committees are uncommon, but many Brazilian firms use an alternateapproach to ensuring financial statement accuracy – establishing a fiscalboard. A minority of firms provide takeout rights to minority shareholderson a sale of control. Controlling shareholders often use shareholdersagreements to ensure control.