very few cases to date. Thus, big-name companies in the
Brazilian stock market, such as mining giant Vale, tobacco
company Souza Cruz and retail chains Lojas Americanas
and Companhia Brasileira de Distribuição remain outside
the Novo Mercado.
In other cases, regulatory obstacles hinder voluntary
adhesion of companies. Companies in the civil aviation
segment, for example, cannot have more than 20% of their
voting capital in foreign hands, in accordance with the
Brazilian Aeronautical Code. However, the government is
considering increasing this limit to 49%, which could give
the opportunity for companies in the segment, like Gol and
TAM, to migrate to the Novo Mercado. As the companies
in the segment can only issue shares with voting rights,
restrictions of this type make getting listed in the Novo
Mercado unfeasible. The banking sector, which involves
large joint-stock institutions, also needs presidential
authorization in order to increase the slice of voting capital
in the hands of foreigners, which currently varies according
to the institution. And Petrobras, the largest Brazilian
company in terms of market capitalization, is also unable to
join the Novo Mercado due to regulatory issues. According
to the Oil Law of 1953, the capital of the oil company must
be divided between preferred shares and common shares,
and most of the voting shares must belong to the state.
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Hawkamah issue02 56pages.indd 52
Specialists and authorities in Brazil are unanimous in their
position that the main challenge of the Novo Mercado will
be staying up-to-date. It is essential that the rules evolve
according to investor demands and interest on the part
of companies to improve their practices. Nirvana for
its creators would be when, at some moment, the Novo
Mercado would cease to exist, because it would include all
the companies trading on the stock market. But it would
seem that this is increasingly a pipe dream.
The requirement for all shares to have voting rights is an
extremely difficult principle for all companies to adopt.
Besides regulatory restrictions, many of them want to
preserve the figure of the controlling shareholder and
opt for issuing preferred shares or the so-called “units”,
which bundle together common shares and preferred
shares into a single package. Investors, in turn, agree
with the attempt to preserve a controller in some cases
— and, of course, they are partial to the higher dividends
offered by the preferred shares. It seems that the liberty
of companies and investors to design their agreements on
a case-by-case basis will be preserved. It will be up to the
Novo Mercado regulators, therefore, to keep it “new” over
time, linking it to the demands of investors and companies
without neglecting the essence of fair governance. This is
its big challenge for the coming years.
Novo Mercado: Will it ever cease to be “new”?
Article by Simone Azevedo
9/19/13 10:08 AM