São Paulo, March 29th, 2017 – The Association of Capital Market Investors – Amec –carries out a consistent and attentive work to identify situations that may represent a threat to the integrity of the market and the rights of minority shareholders. Corporate restructurings are one of the main concerns among shareholders since, because of their nature, they can impose redistributions of values among the different classes of shareholders.
On March 15th, Amec’s Technical Commission analyzed the operation suggested on February 20th by Vale’s controlling shareholders, which ultimate objective is the unification of all classes of shares and the eventual migration to BM&F Bovespa’s Novo Mercado special listing segment.
Notwithstanding the merit of these objectives – in line with Amec’s view that a structure with only one class of shares is the one that best leads to good corporate governance practices –, they are not enough, for themselves, to ensure a properly structured operation, as we have already learned from previous experiences.
In Amec’s opinion, the operation suggested has very important characteristics, namely:
- The consultation to the company’s preferred and common minority shareholders in a specific meeting;
- The prior announcement by the controlling shareholder that it will refrain from voting in the two stages of the operation;
- The voluntary nature of the conversion;
These characteristics build legality into the operation, dissociating it from the hostile operations we have been witnessing in recent years. With them, the decision becomes an arms-length negotiation, providing minority shareholders with the opportunity of “buying” a governance structure different from today’s. The operation also illustrates that different classes of shares have different values, reiterating the importance of investors exercising care when offered the opportunity to buy assets with limited political rights, especially along the lines of specific innovations being attempted in Brazil and abroad.
Importantly, it’s up to Vale’s minority shareholders to analyze the “price” offered, with certainty that, in Amec’s opinion, they are dealing with a correct operation from the procedural point of view. In fact, it can eventually become an important benchmark for the Brazilian capital market.
However, Amec reiterates that it makes no voting recommendation and does not intend to judge whether the offered exchange ratio deserves the votes of its members.
MAURO RODRIGUES DA CUNHA