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									                               Las Empresas de Familia en el
                                    Mercado de Valores

                                                       Heloisa B. Bedicks

                                           Bogotá, Noviembre 4 de 2010



Material elaborado para utilização exclusiva nos cursos do IBGC.
      Corporate Governance
      BMF&Bovespa Special Listing Segments
      CG in Family-Owned Companies
      IBGC – Brazilian Institute of Corporate
      Governance



Material elaborado para utilização exclusiva nos cursos do IBGC.
        Corporate Governance

            CG is the system whereby organizations
             are run, overseen and incentivized. It
               involves relationships between the
             shareholders, the Board of Directors,
            the Officers and oversight bodies. Good
            corporate governance practices convert
                      principles into objective
              recommendations, aligning interests
               with the purpose of preserving and
               enhancing the organization’s value,
               facilitating its access to capital and
                   contributing to its longevity.

Material elaborado para utilização exclusiva nos cursos do IBGC.
        What did not change in these 15 years


            Corporate Governance Principles

                     Fairness

                   Transparency

                   Accountability

                   Corporate Responsibility

Material elaborado para utilização exclusiva nos cursos do IBGC.
        CG Special Listing Segments




Material elaborado para utilização exclusiva nos cursos do IBGC.
        Evolution of the IPOs
        Corporate governance as the norm for local companies

               IPOs by listing segment                                  Participation of listing segments at the
                 (2004 - Sep/2010)                                             Stock Exchange (Sep/10)

                               BDR
                                                                        •   34% of total listed companies
                               7%                                       •   66% of market capitalization
                 Nível 1
                  6%
                                                                        •   77% of traded value

            Nível 2
             14%


                                               Novo
                                              Mercado
                                               73%




                                                       Launching                               64
                                                      of the Novo
                                                        Mercado

                                                                                         26                 6      8
                                                                                                     4
        2                  1                1         1             1         7    9

      1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 sep/10
       Source: BM&FBOVESPA.

Material elaborado para utilização exclusiva nos cursos do IBGC.
   Evolution of Novo Mercado
   Number of companies listed in Novo Mercado and Levels 1 &2

                                                                                                                     162




            Novo Mercado                                                              92     99        105           107
            Nível 2

            Nível 1                                                          44
                                                      7            18                 20     18
                                        2                          10        14                         19           20
                          2             3             7
                          3                                                           44     43
                                       31            33            37        36                         35           35
          19             24

        2001           2002          2003           2004           2005     2006      2007   2008      2009        sep/10

                                                                                              Only voting shares
                                                               Shareholders’ rights           Shareholders’ rights
                                                             Corporate governance            Corporate governance
             Higher transparency
                                                              Higher transparency             Higher transparency




        Source: BM&FBOVESPA.

Material elaborado para utilização exclusiva nos cursos do IBGC.
        Concept and brief history of Novo Mercado

        Main problem identified by the Exchange: the lacking of
            enough or suitable protection for minority shareholders.

           Main goal of the Exchange: the creating of a receptive
            environment for public offerings.

           Corporate governance and market:
              Corporate governance practices can provide the
               alignment of interests between investors and companies
              For investors: it implies risk mitigation

              For companies: it implies better valuation




Material elaborado para utilização exclusiva nos cursos do IBGC.
       Concept and brief history of Novo Mercado


        Launched in December 2000, is a special listing segment
         based on corporate governance requirements over and
         above the Brazilian Corporate Law and the capital market
         regulation.

        Option between Law (regulation) and Codes
         (recommendation – “comply or explain”) – Novo Mercado is
         an opt-in system.

        Novo Mercado is a private initiative, based on the self-
         regulation power of the Exchange, in order to improve the
         quality (or the credibility) of public companies and capital
         market.


Material elaborado para utilização exclusiva nos cursos do IBGC.
        Novo Mercado Listing rules

         Only one class of shares, with full voting rights: one share,
          one vote

         Full tag along rights

         Delisting: tender offer at a price based, at least, on the
          economic value

         Board of directors: a minimum of 5 members, with two year
          terms, 20% independent

         25% minimum free-float and adoption of special procedures
          in public offerings to enhance the dispersion of the
          company´s shares

         Agreement to settle any shareholder company disputes
          through arbitration, in order to ensure the enforcement

Material elaborado para utilização exclusiva nos cursos do IBGC.
        Novo Mercado Listing rules

    Much higher standards of disclosure

         Annual financial statements in IFRS
         Improved Quarterly Reports, including an English
          version, consolidated financial statements and
          cash flow statements
         Related party transactions
         Trading and ownership of the company’s shares by
          the management and the controlling shareholders.




Material elaborado para utilização exclusiva nos cursos do IBGC.
        Novo Mercado: demonstration of corporate
        governance value

         The standard is set - the model is Novo Mercado

         Investors have accepted new listings only at Novo
          Mercado

         The culture of the companies has changed in
          direction to adoption of good corporate governance
          practices




Material elaborado para utilização exclusiva nos cursos do IBGC.
        Family owned companies in Novo Mercado


            Camargo Correa                                        JBS
            Drogasil                                              JHSF
            Duratex                                               Marfrig
            Grendene                                              Marisa
            Iguatemi                                              Profarma
            Rossi                                                 São Martinho
            Ioschpe Maxion                                        WEG
                                                                   Trisul

Material elaborado para utilização exclusiva nos cursos do IBGC.
        Family owned companies in Level 2 & Level 1

         Level 2
                Gol
                Marcopolo
                TAM

         Level 1
                Cedro Cachoeira
                Eucatex
                Gerdau
                Itau Unibanco
                Itausa
                Klabin
                Metalúrgica Gerdau
                Randon
                Suzano

Material elaborado para utilização exclusiva nos cursos do IBGC.
   Results of the Closed hearing

   •     Tender offer requirement triggered at 30% accumulation of material ownership
         interest  Not approved

   •     Requirements related to the board of directors
                                                                                             Not approved
       − Increasing to 30% (from 20%) the percentage of independent directors
       − No accumulation of the positions of chairman of the board and CEO       Approved
       − Mandatory establishment of an audit committee         Not approved
       − Requirement for the Board of Directors to advise the shareholders and the market on the
         terms and conditions of any tender offer     Approved

   •     Restrictions to certain bylaws provisions
           −    Requiring qualified majority vote (qualified quorum)      Approved
           −    Entrenched provisions (“Cláusula Pétrea”)
           −    Poison pill provisions

   •     Voting limitation – no limitation permitted under 5% of the shares                       Approved

   •     Mandatory adoption and release of
           −    Securities trading policy                      Approved
           −    Code of Conduct
                                                                                     Source: BM&FBOVESPA.


Material elaborado para utilização exclusiva nos cursos do IBGC.
        Governance in family owned business


              Family and shareholders’
              governance
                                                                           Invisible
                                                                          governance
                                                              OWNERSHIP
                           FAMILY(IES)                       PATRIMÔNIO
                           FAMÍLIA(S)




                                               COMPANY                        Visible
                                               EMPRESA                      governance
              Corporate
              governance


Material elaborado para utilização exclusiva nos cursos do IBGC.
Material elaborado para utilização exclusiva nos cursos do IBGC.
        Corporate Governance in Family Owned
        Companies




Material elaborado para utilização exclusiva nos cursos do IBGC.
            Corporate Governance in Family Owned
            Companies
        •Which family-owned companies may be considered as
        standing out in terms of corporate practices of governance in
        Brazil?

        •What is the level of compliance of these companies with
        respect to the best practices?

        •What was the motivation for these companies to adopt good
        governance practices?

        •How did the implementation process of the new practices
        and of the current governance model occur in these
        companies?

        •What were the benefits perceived by the companies as a
        result of the improvement of their corporate governance practices?

Material elaborado para utilização exclusiva nos cursos do IBGC.
            Opportunities for Governance of Family
            Owned Companies




        Convergence of interests on top management
        Higher level of commitment and dedication
        Agility in the decision-making process
        •their corporate governance practices?




Material elaborado para utilização exclusiva nos cursos do IBGC.
            Risks in the Governance of Family Owned
            Companies

        Imbalance between the growth of the company’s
        profitability and family growth
        Transition between generations and sucession
        plan
        Separation of the interests between company and
        family
        Maintenance of professionalism under certain
        situations
        Nepotism
        Rivalry between generations and siblings
        •their corporate governance practices?



Material elaborado para utilização exclusiva nos cursos do IBGC.
            Challenges to be faced in Governance of
            Family Owned Companies

        Reconciling family growth with the growth in
        company profitability
        Reconciling collective interests with the individual
        expectations of the involved parties
        Educating heirs for the role as shareholders who
        must add value to their capital
        Professionalizing the family and ownership at the
        same pace as the company
        Preparing reports in a periodic and transparent
        manner for all the parties involved
        •their corporate governance practices?



Material elaborado para utilização exclusiva nos cursos do IBGC.
        Itaú Unibanco

          Motivations                                 Implementation                   Main Benefits
                                                           Process
    The primary motivation                                                      Internal:
     was the creation of value                  1966 – Public offering of
                                               shares by the controlling         • Improved internal controls,
     for shareholders by                       holding company of Itaúsa         accounting practices and
     increasing the value of                                                     managerial instruments
     their shares (adopting                    1999 – Structuring of the IR
                                               area                              • The entry of independent
     good practices of
                                               2000 – Code of Ethics and         directors and their active
     corporate governance not                                                    participation in committees
     related to immediate                      establishment of a Fiscal
                                               Council                           enriched discussions
     funding needs)
                                               2001 – Entry of independent       External:
                                               directors and adhesion to Level
    Method for improving                      1 of BMF&BOVESPA                  • Better reputation for the
     operational performance                                                     company
                                               2002 – Granting of tag along,
                                               issuance of Level 2 ADR’s, and    • Recognition by the market,
    Method for improving the                  establishment of board            with a subsequent increase in
                                               committes                         the number of investors
     company’s image outside
     Brazil, facilitating                      2004 – Audit committeee with      • Better valuation of assets,
     internationalization and                  two independent members           thus reducing costs of raising
     penetration among                                                           capital
                                               2005 – New code of ethics
     foreign investors in the
     1990s                                     2008 –Merged with Unibanco
Material elaborado para utilização exclusiva nos cursos do IBGC.
                                               Gerdau S.A.
               Motivations                                   Implementation                  Main Benefits
     Search for better perception                              Process
     of stock value                                    1947 – Becomes a listed         Internal:
                                                      corporation
                                                                                         Cultural change and
    Increased competitiveness of                      1994-1997 – Societary           formalization of working
     the group internationally                        restructuring, consolidating      processes
                                                      operations into two companies
                                                                                         Lower dependence on
                                                       1999 – Launch of Level 2        specific persons and greater
    Increased funding potential                      ADR’s
     (necessary for strategy of                                                         institutionalization of the
                                                       2001 – Gerdau S.A. adheres      company
     expansion abroad)
                                                      to BMf&Bovespa Level 1
                                                                                        External :
      Increase of transparency and                     2002 – Definition of a new
 
                                                      governance model, with change      Increased number of
     relationship with capital                        in the composition of the board   international issuances for
     markets                                          and the entry of independent      funding, mainly through
                                                      directors                         bonds (longer term, lower
                                                                                        issuance costs)
     Conduction of the succession                     2002 – Tag along granted to
                                                      all shareholders                   Increased financial ratios of
     process without losing the
                                                       2003 – Metalúrgica Gerdau       company shares
     accumulated experience of
                                                      adheres to BOVESPA Level 1
     controlling shareholders
                                                      2006 – Sucession Planning
                                                      and Segregation of Chairman
                                                      and CEO
Material elaborado para utilização exclusiva nos cursos do IBGC.
                                                        Localiza
           Motivations                             Implementation Process                Main Benefits

                                                 1973 - Inception
      Adding value to                                                               Externals:
       shareholders by increasing                1981 - Becomes the largest car
       the company’s chances of                  rental company in Brazil             Reduction of the cost of
       long sucess term                                                              equity capital and better
                                                 1997 – A North-American             credit ratting
                                                 private equity fund is admitted,
       Acces to capital as a                    acquiring 33.3% of the firm          Increased set of options for
       crucial factor for the                                                        financing projects (issuance
                                                 2005 – IPO through a                of debentures)
       operations in a capital-                  secondary offer of US$ 108
       intensive industry with                   million in Novo Mercado
                                                                                      Increased liquidity and
       high fixed costs and the                                                      market value of the
                                                 2005 – Public offer of
       tendency to consolidation                 debentures on the domestic          company for its shareholders
       in Brazil over the next few               Brazilian market (R$ 350million)    (from US$300 million to
                                                                                     US$1.2 billion during the
       years                                                                         first year following the IPO)
                                                 2006 – New secondary public
                                                 offer and primary offer of shares
       Entry of a strategic
       partner in 1997 and public                2007 – First shares’ rebuy
                                                 program
       trading on Bovespa Novo
       Mercado in 2005.                          2008 – Second shares’ rebuy
                                                 program

Material elaborado para utilização exclusiva nos cursos do IBGC.
                                                    Marcopolo
             Motivations                             Implementation Process                 Main Benefits
                                                  1970s from early – Realization of   Internal:
       The permanent need to                     annual meetings with na
       grow using market funding                  overwhelming attendence of           Improvement of the
                                                  minority shareholders               decision-making process at
       made governance a
       requirement, not an option                 1978 – Begging of trade publicy,    top management level
                                                  policy of regular dividends
                                                                                       Greater tranquility for
                                                  1996 – ADR program                  executivies to seek good
       There was early
                                                  1998 – Entry of an active           projects
       implementation of
                                                  institutional investor as a
       governance practices as a                  company shareholder                 External:
       mean of signaling the
       guarantee of return on                     2001 – Change in the size and        Capacity of raising funds
       investiment.                               composition of the board            even during difficult times
                                                                                      (operation in October 2002)
                                                  2001 – Installation of the fiscal
       Tha company was                           council                              Attainment of special
                                                                                      visibility, especially in
       influenced by the idea of a                2002 – Adherence to Level 2         relation to industry peers
       good relationship with                     BOVESPA governance
       shareholders prior to the                                                       Better perception of the
       movement towards best                      2004 – Approval of the Code of      company’s shares by
                                                  Conduct                             investors
       governance practices
                                                  2010 – New shareholders’
                                                  agreement

Material elaborado para utilização exclusiva nos cursos do IBGC.
                                                 Natura
          Motivations                        Implementation                            Main Benefits
                                                  Process
     Internal motivation pushed          1989 – Hiring independent
 
                                         auditors                               Internal:
     by the controllers
     themselves                          1998 – Creation of a board of           Greater formalization of work
                                         directors                              processes
     Governance seen as an              1999 – Creation of the                  Greater professionalization of
     instrument to suport the            committees of the board of             company management
     gradual move away from              directors, including the audit
     their daily business activities     committee                               Greater capacity to attract and
                                                                                retain talented personnel
                                         2001 – Issuance of annual
                                         reports still as a privately held
     Improvement of                     companny                               External:
     governance practices not            2004 – Appointment of a CEO             Increase in perceived value
     associated with public              from outside the controlling
     trading initially                   group                                   Use of the market as a partner
                                                                                to monitos the business
                                         2004 – Public trading on the
                                         BOVESPA Novo Mercado                    Possibility of greater
     Goal to institutionalize and
     perpetuate its business             2005 – Creation of internal            diversification of equity
     model                               departament for corporate
                                         governance
                                                    2009 – Secondary public
                                                    offering
                                                    2010 – AGM transmitted by
                                                    video conference
Material elaborado para utilização exclusiva nos cursos do IBGC.
                                                      Weg S.A.
             Motivations                            Implementation process          Main benefits

   Since its foundation, there    1961 – Adoption of                        Internal
                                   transparency principles at the
   was a declaration of the        time of its inception
   principle that all shareholders 1971 – Public trading and hiring           Development of the
   should receive good return      of na external auditor                    management, with an
   and information on the          1976 – Change in the size and             understanding of the functions
                                   composition of the board                  of the board of directors and
   business                        (Brazilian Corporate Law)                 the fiscal council
                                   1990 – 1st sucession plan – a
                                   new CEO is elected (from one of           Demand for greater
   Controllers realizing that the
                                   the families owner)                       professionalization within the
   continuity of the company       2001 – Adherence to                       executive management itself
   depends on it being well-       BOVESPA’s Level 1 governance
   positioned on the capital       2002 – Granting of tag along              Development of better
                                   rights                                    internal work procedures and
   market, and that the            2004 – Structuring of an IR               controls
   adoption of good governance area
   practices is fundamental for    2004 – Occurrence of a                    External
   positioning in this market      secondary public offering of
                                   shares in possession of the
                                   largest investors, increasing                Greater access to capital
   Concern with
                                   their liquidity on the exchange
                                   2007 – Adherence to                       Perception that financing
   institutionalization of the     BOVESPA’s Novo Mercado                    agencies assingn intrinsic
   company, not individualizing 2008 – 2nd sucession plan –                  value to management and
   decisions                       names 1st CEO outside the                 governance in their loan
                                   family.                                   decisions
Material elaborado para utilização exclusiva nos cursos do IBGC.
        Main Motivations

            Desire to institutionalize and perpetuate their business
             model

            Means for implementing a defined strategic plan

            Way to create value for their shareholders

            Increase of the possibility for raising funds from creditors
             and shareholders

            Form to improve the company’s image abroad, facilitating
             its internationalization and permeating foreign investors



Material elaborado para utilização exclusiva nos cursos do IBGC.
        Main Internal Benefits Perceived

            Increased profissionalization in company management and
             alignment of interests

            Higher degree of formalization of the work processes

            Improvement of the decision-making process at top
             management level

            Clearer separation of roles between representatives of the
             ownership (directors) and of management (chief executive
             officer and other executives)

            Better management of the risks associated with the
             investment and improvement of internal controls

Material elaborado para utilização exclusiva nos cursos do IBGC.
        Main External Benefits Perceived


            Better perception of the corporate roles by the investors

            Increased access to capital

            Increased credit worthiness and decreased cost for the
             raising of funds

            Increase in share liquidity and in the volume of shares
             traded

            Better image



Material elaborado para utilização exclusiva nos cursos do IBGC.
        Main points in disagreement with best
        practices – Ownership practices

            Shares are issued without voting rights

            The company does not guarantee tag along
             rights for ordinary shares beyond those legally
             required

            The bylaws do not clearly establish the situations
             in which shareholders will have the right to
             withdraw from the company



Material elaborado para utilização exclusiva nos cursos do IBGC.
        Main points in disagreement with best
        practices – Board practices

            There is not a structured program for the
             admission of new directors
            There is no internal rule system for the board
             that regulates its activities
            The board does not formally evaluate its
             performance as an entity
            The board has no updated plan for the
             succession of the CEO
            The board does not have an annual budget
             approved by the shareholders


Material elaborado para utilização exclusiva nos cursos do IBGC.
        Main points in disagreement with best
        practices – Management practices


            The annual report does not inform the
             remuneration of the officers or the
             directors
            The CEO does not periodically evaluate
             the performance of the officers or report
             results to the board
            Corporate documents do not explain the
             company’s governance model


Material elaborado para utilização exclusiva nos cursos do IBGC.
        Main points in disagreement with best
        practices – Conduct and conflict of interest
        practices

            The bylaws do not prohibit loans to
             controllers and other related parties

            There is not a code of conduct prepared
             by the management and approved by the
             board of directors




Material elaborado para utilização exclusiva nos cursos do IBGC.
        IBGC’s activities for family owned business

           Training program since 2002
           Partnership with FBN for training programs
           Research studies
           4th edition of Code of Best Practices more
            adapted to different kinds of organizations
            – including family owned businesses
           Two panels on 2010 Annual Conference
           2011’s agenda will be based on family
            owned businesses


Material elaborado para utilização exclusiva nos cursos do IBGC.
        Conclusions of 2010 Annual Conference

           Latin American family companies may be
            well prepared to compete globally – if they
            master some skills

           Brazilian companies have no experience in
            being the HQ

           Family companies have advantages over
            corporations, as the decision process tends
            to be faster

Material elaborado para utilização exclusiva nos cursos do IBGC.
        IBGC
        Brazilian Institute of Corporate Governance

              Non-governmental organization

              Not-for-profit

              Founded in 1995

              Dedicated to the development and promotion of
               Corporate Governance in Brazil

              Headquartered in São Paulo, with chapters in
               PR, RS, RJ and MG


Material elaborado para utilização exclusiva nos cursos do IBGC.
        Headquarters and Chapters




Material elaborado para utilização exclusiva nos cursos do IBGC.
      Membership evolution




Material elaborado para utilização exclusiva nos cursos do IBGC.
                                 Code of Best Practicesnof CG




        1999                                   2001                2004   2009
Material elaborado para utilização exclusiva nos cursos do IBGC.
    CG Publications




Material elaborado para utilização exclusiva nos cursos do IBGC.   42
        Other Publicactions




Material elaborado para utilização exclusiva nos cursos do IBGC.   43
        Books




Material elaborado para utilização exclusiva nos cursos do IBGC.   44
        Police Papers




Material elaborado para utilização exclusiva nos cursos do IBGC.
        Back up’s slides




Material elaborado para utilização exclusiva nos cursos do IBGC.
        Main issue of the review process

        Ownership structure: from concentrated to dispersed

                How to protect the shareholders and the companies?
                How to avoid conflict of interests?
                Anti-takeover clauses adopted by companies (“poison pills”): defense
                 measures or real obstacles to change the control and the management?
                Transfer of control is the most sensitive item of the current review

        The Stock Exchange proposal

                Mandatory bid triggered by accumulation of a material ownership interest
                 based on the City Code and the Takeover European Directive
                Material ownership: 30% of voting shares
                Equitable price: the highest price paid by the acquirer in the last 12
                 months
                Members of the board of directors must disclose your opinion about the
                 offer (against or in favor)

Material elaborado para utilização exclusiva nos cursos do IBGC.                            47
    Novo Mercado
    Current main requirements
                Shareholders’ rights

                                                         •     Only voting shares
                                 •     Alignment between economic exposure and voting rights
                      •    Brazilian Corporate Law allows non-voting shares – 2/3 (until 2001) and
                                              1/2(after 2001) of the total capital
                •     Full tag-along rights extend to all shareholders in case of change of control
                           •     Public tender offering at economic value in case of delisting
                                               •     Arbitration panel to solve conflicts



           Transparency (monitoring)
                                               •     Disclose of additional information
          •     Board of directors with at least 5 members being 20% of them independent ones


                          Dispersion
                                                    •     Minimum free float of 25%
            •       Procedures in public offerings to enhance the dispersion of the company shares

Material elaborado para utilização exclusiva nos cursos do IBGC.                                      48
        Governance structure in each circle

                                                                                   Family holdings


Family governance
                                                                                              Board of
                                                                                              shareholders
                                         FAMILY(IES)                         OWNERSHIP



                                                                      PATRIMÔNIO
                                          FAMÍLIA(S)
                                                                                          Shareholders’
                                                                                          agreement

                                                                   COMPANY
                                                            EMPRESA




                                                            Board of directors
Material elaborado para utilização exclusiva nos cursos do IBGC.                                             49
                                    Gol Linhas Aéreas

                                                           Implementation                  Main Benefits
             Motivations                                      Process
                                                  2002 – Start of the planning of     Internal:
  Mean for maning possible                       governance practices
     a public offering, wich in                                                        Documentation of
     turn is a mean for raising                   2003 – Financial statements in
                                                  US-GAAP                             internal controls and clear
     low cost funding                                                                 overview of working
                                                  2003 – Internal project carried     processes
                                                  out for improvement of corporate
     Means of creating credibility               governance                       Professionalization of the
     on the market, especially                                                    company and alignment of
     since it is a fresh company                  2004 – Admission of independent interests
                                                  directors
                                                                                      External:
                                                  2004 – Installation of board
                                                  committess                           Greater credibility of the
                                                  2004 – Public offering at Level 2   interested public
                                                  of BOVESPA and ADR Level 3
                                                                                       Improvement in the
                                                  2004 – Disclousure committee        perception of quality in its
                                                  and SOX project                     securities

                                                  2005 – Admission of institutional    Increased credit capacity
                                                  partner as a significant            and reduction of funding
                                                  shareholder                         costs

                                                  2009 – Corporate reorganization
Material elaborado para utilização exclusiva nos cursos do IBGC.                                                     50
                                                 Klabin S.A.
            Motivations                                   Implementation
                                                             Process                   Main Benefits

                                                  Early 1980’s – Market         Internal:
       Vision that in order to
                                                  executive appointed as
       ensure the continuity of the               general director. Public       Clear separation of roles with
       company, it would be                       tranding initiated, and       simultaneous achievement of
       necessary to separate the                  estabilisament of the rule    two objectives: maintaining
       familly from the                           separating ownership          the family in control and the
                                                  (controllinf families) and    sucess of the corporation
       management, clearly                        management
       defining the roles of                                                     Creation of na efficient
       executives, shareholders,                  1999 – Issuance of Level 1    decision-making system that
       and controlling family                     ADR’s                         made it easier to make hard
                                                                                decicions
       members                                    2002 – Adherence to
                                                  BOVESPA’s Level 1 corporate   External:
                                                  governance
       Observance of pratices
                                                                                 Better valuation of company
       undertaken by other                        2005 – Granting of 70% tag    shares by investors
       companies and the                          along to non voting
       importance attributed to                   shareholders
       these practices by market                                                 Better percepation by
                                                  2010 – Launch of ADRs         development bamks ( BNDES
       agents                                                                   and IFC)




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                                          Pão de Açúcar
          Motivations                            Implementation process                    Main Benefits
       Since it was founded in                 1995 – Public trading                Internal:
       1958, the adoption of
       good governance                          1997 – Issuance of Level 2 ADRs       Clearer separation of roles
                                                and structuring of the area of       and definition of the
       practices was always                     Investor Relations
       tied to the idea o fthe                                                       appropriete decision-making
                                                                                     forums (board of directors,
       continuity of the                        1999 – The french group Casino       board committees, and
       company, wich made it                    enters as a strategic partner        management)
       feasible for the group to                2002- Entry of the first CEO who
       continue, even after key                                                       Greater ease and agility in
                                                was not a member of the              the decision-making process
       persons relinquished                     controlling familt, migration of
       executive positions                      family members to the board of
                                                directors                            External:
      Part of the groups’                      2003 – Aderence to Level 1 of         Greater acces for funding
                                                BOVESPA governance rules             from shareholders and from
       restructuring process in
       the 1990s was                                                                 creditors
                                                2005 – Increase of the
       motivated by the need                    participation of the Casino groroup  Components taken into
       to find funding on the                   in the control group                 consideration by risk
       capital market in order                                                       classification agencies (rating
                                                2008 – New increase of the           agencies)
       to implement thfined                     participation of the Casino group in
       strategic planning                       the control group

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                                                           Randon

            Motivations                                  Implementation                   Main benefits
                                                            process
    Awareness on the part of
                                                                                     Internal
   the controllers that                           1971 – Public trading and the
   transparency was important                     hiring of an external auditor
                                                                                     Improvements in the
   for the valuation of the                                                          compliance of rules and of
   company and, consequently,                     1993 – Professionalization of      work processes
   for the growth of family                       the board of directors and         Better flow of information

   assets                                         simplification of the societary    Capacity to better listen the
                                                  structure                          market and to improve
                                                                                     decision making
   Concept disseminated by                                                          Greater efficiency of the
                                                  1999 – Implementation of a
   the founder that minority                      family council and initiation of   Board of Directors
   holders should be treated as                   discussions on the succession
   well as majority holders                       process
                                                                                     External
   Internal project to improve                   2001 – Adherence to
   long term planning and                         BOVESPA Level 1                     Huge increase on shares
                                                                                     valuation (2000% in six
   management of the                                                                 years)
   company, separating roles                      2006 – Public offering of          Increased liquidity of the
   at top management levels                       shares                             shares on the stock exchange
                                                                                     Greater ease in obtaining
                                                  2008 – French subsidiary           funding, including credit

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                                                              Sadia
                                                       Implementation                 Main benefits
           Motivations                                    process
                                               1944 – Foundation of the          Internal
       Corporate governance                   company
       as a mean for                           1964 – Establishment of board      Improvement of top
       controllers to                          of directors                      management decision-making
                                                                                 process
       perpetuate their                        1971 – Public trading begins
       investments                                                               Better criteria for evaluationg
                                               1994 – Corporate reestructuring   performance and for
                                               carried out                       remuneration policy
      Manner for top                          1994 – Board of audit committee
       management to better                    established                       Improvement of internal
       structure itself                                                          controls
                                               1990s – Entry of independent
                                               directors (today, five members)   External
      Avoidance of problems                   2001 – Level 1 BOVESPA and
       in the capital-talent                   adherence to the Level 2 ADR       Better perception by
                                               program                           creditors (debt capital)
       relationship
                                               2004 – Fiscal council created
                                               2005 – Adaptation to Sarbanes-     Better image (corporate
                                               Oxley                             governance as a certificate of
                                               2008 – Problems with              quality)
                                               derivatives
                                               2009 – Merger with Perdigão,
                                               creating BR Foods
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                                                        Suzano
            Motivations                               Implementation
                                                         process                       Main benefits
     Perception that a good                                                      Internal
    governance model, with
                                                 2002 – Public trading
    clear rules for the                          2004 – Creation of an IR         Improvement of internal
    relationship between the                     area and website for             work procedures and controls
    company and the controlling                  investors, adherence to
    family, was essential to                     BOVESPA Level 2, realization     Clearer separation of roles
    guarantee the continuity of                  of the first public shares       between owner and
    the corporation                              offering                         management representatives
                                                                                  (separation between CEO and
                                                 2005 – Election of two           chairman positions)
    Requirement of outside                      independent directors,
    sources of funding because                   societary (simplification)       External
                                                 restructuring
    of its operating sector
                                                                                   Greater confort and trust of
    (capital intensive) and the                  2006 – Creation of a board       investors
    strategic planning of the                    audit committee and
    group (strong growth plan)                   expansion of the scope of        Greater liquidity and share
                                                 activity of the sustainability   trading volume
                                                 and strategy committee
    Increase of the possibility                                                  Greater access to capital and
    of funding and investment                    2007 – Secondary public          valuation of shares above
    for companies in the group,                  offering                         competitors in the sector
    which was assumed to be
    essential for its success

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