Legal Protection of Minority Shareholders of Listed Corporations in Brazil: Brief History, Legal Structure and Empirical Evidence

Abstract

This article examines key elements in the history, structure, and application of the legal framework offering protection to minority shareholders in Brazilian listed corporations. Section I examines the history of minority shareholders protection in Brazil. It does so in order to give context to the main reformations to the Brazilian Corporations Law of 1976. It also highlights recent developments in the Brazilian stock markets, particularly the fact that dispersed ownership can for the first time in Brazilian history be found in a few listed corporations. Section II presents the main traits of the current legal framework for the protection of minority shareholders. It analyzes the most important provisions under the Brazilian Corporations Law, as well as the most relevant regulations issued by the São Paulo Stock Exchange (BM&FBovespa). Section III presents the results of an empirical work on the degree of enforcement of laws and regulations protecting minority shareholders. The data shows that judicial and administrative application of such legal provisions is still relatively unpredictable and time consuming. Section IV concludes.