Committed to Reform

Nov 1, 2001

The president of the CVM, Brazil's capital market regulatory agency, explains why new legislation will reform the country's equity markets, improve corporate governance and help minority investors.

Osório

By the time you read this article, President Fernando Henrique Cardoso will have signed Brazil's new corporate law, after three years of debate in Congress.

The government is committed to developing the country's capital markets, and knows that among other things, increased transparency, more rigorous enforcement of the law and better protection for minority investors are necessary to achieve this goal. I believe the new law does address these points. The government knows that this is just the beginning of a new phase and will need to do more.

In order to better understand its strategy to reform the Brazilian capital markets, we need to go back in time.

The previous corporate law dates from 1976. At the time, it marked a major improvement over the previous legislation. However, policymakers were concerned with attracting retail savings to fund Brazilian corporate groups and they achieved this through...

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