Domestic companies need more incentives to adopt distance voting procedures

In an event held on July 2, the B3 presented the distance voting results in the 2019 annual general meeting (AGM) season to the Brazilian capital market. Amec CEO, Mauro Rodrigues da Cunha, was one of the speakers invited to introduce the viewpoints of investors about the topic.

This year, of the 315 companies listed in the B3 that are obliged to provide shareholders with distance voting procedures, 300 registered the electronic proxy card at the Stock Exchange and 185 received votes. More than 2,700 investors made use of the system in the AGMs, 98 percent of whom, foreign investors. The Brazilian Securities and Exchange Commission (CVM) regulated the practice in 2015, but it became compulsory for the companies only in 2018.

Mauro Rodrigues da Cunha points out that the result does not generate value in terms of shareholders’ participation as many foreign institutional investors used to vote in the meetings before the advent of the distance voting system. Yet the participation of domestic funds in the AGMs remains weak.

Geraldo Soares, coordinator of the Reporting and Capital Market Commission of the Brazilian Institute of Corporate Governance (IBGC), highlighted that foreign investors represent a significant percentage of the votes as they invest higher amounts compared to domestic fund managers, but that the tool facilitated the voting process for local institutional investors that used not to participate in the AGMs because of red tape involved in the process.