Brazil – CVM Shareholder Rights Report

Brazil – CVM Shareholder Rights Report

On 2 December 2019, BRZ CVM published report of shareholders rights.

  • Report highlights main results of 1st phase of the working group (WG) main project.


  • Originally in English, study is available on ministry of economy, BRZ CVM websites both in its original version and also as free translation into Portuguese.
  • Analyzes legal dispute resolution mechanisms involving shareholders, lawsuits available for corporate claims in Brazil, procedural issues, use of arbitration.
  • Legal framework, challenges re use of arbitration in publicly traded companies, etc.

Working Group Objective

  • WG was set up to study, propose measures to improve legal mechanisms available to shareholders to protect their rights, if appropriate, obtain compensation for damages.

Report Findings

  • Authors state there is widespread perception that current Brazilian legal regime does not offer adequate mechanisms for investor protection.
  • It is relatively uncommon for minority shareholders to propose legally envisaged measures to seek redress from directors or controlling shareholders for losses to firms.
  • Report lists several factors that explain low number of lawsuits e.g. costs, lack of information, restrictions on shareholder's active legitimacy, risk of further losses.
  • Proposes improvement to currently existing mechanisms to make them more effective.
  • Especially re damage repair as improvement of private tutelage mechanisms is an extremely important measure for Brazilian capital market's development.
  • BRZ CVM regularly institutes proceedings to ascertain liability of managers or controlling shareholders for losses caused to companies.
  • But even if illicit act proven, BRZ CVM is not competent to request compensation from company or investors, so private repair mechanisms complement its activities.
  • Updating of existing regime can contribute significantly to attract new investments.