A Compromise Solution
After four years of debate, Brazil's Congress finally approved a minority investor rights law that seeks to balance the interests of all shareholders in publicly traded companies.
To the surprise of almost everyone, the Brazilian Senate
approved in September long-delayed legislation strengthening
minority investor rights and increasing the powers of the
country's toothless securities regulator. The law consumed four
years of often furious debate and investors believe it signals
a fundamental change in Brazil's capital markets. The bosses of
Brazil's major companies, who had benefited from the previous
arrangement, are less happy. They claim the law gives investors
a free ride, particularly holders of non-voting stock who gain
board representation with the new law. The law is a compromise
solution that ended years of argument between corporate Brazil
and investors over how to accommodate the rights and interests
of all shareholders. Although most people say they expect the
new law will deal with some of the obstacles blocking
development of the local equity markets, like most compromises,
the legislation does not satisfy everyone. ...
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