March | 2019

Dialogue between companies and investors shows results in the energy industry

The Climate Action 100+ is an initiative that gathers 323 investors with $33 trillion in assets under management engaged in ensuring that 161 companies take necessary action to reduce their environmental impact. The group develops its activities through the so-called ‘tea and biscuits’ activism, which consists in a continuous dialogue between investors and companies to persuade them to adopt the best practices. Raj Thamotheram, founder and chair of the think tank Preventable Surprises wrote an article highlighting the successes achieved by the initiative (available here).

In its second year, CA100+ delivered, among other results, a management-backed resolution at the oil company BP to align business strategy with Paris goals, a promise by Glencore to cap coal production and an unusually assertive letter from EU investors to EU energy utility companies requesting transitions plans to renewable sources. But Thamotheram points that these developments are worthless if companies do not deliver what they promise, reason why investors should be attentive.

Most of the 161 companies are in the infrastructure and energy sectors, usual targets of those concerned with carbon emissions. The researcher also stressed that companies in the finance sector – such as banks and insurance companies – should take attitude as many times they finance polluting organizations.

ADR agreements demand attention, warns report by the Investor Forum

Eleven UK companies with American Depositary Receipts (ADRs) traded on US stock exchanges had auto-proxy clauses, according to a report prepared by the Investor Forum, UK group established in 2011 to facilitate the dialogue between institutional investors and promote good management practices. The instrument expects that the votes of the uninstructed shares of ADR holders would be automatically in favor of management recommendations (the report is available here).

The Investor Forum approached 11 companies to request a commitment not to use auto-proxy rights, 9 agreed, 1 did not respond, and 1 did not agree. 7 agreed to amend their ADRs at the time of the next review. The airline company Ryan Air was the only one that intends to continue to use auto-proxy rights, but have agreed to disclose the percentage of votes cast in this manner.

The Investor Forum is preparing recommendations on good practices regarding ADRs agreements. Its main objective is to add more transparency to the use of votes of uninstructed shares of ADR holders and ensure that companies do not use them on a discretionary basis.
The next meetings of Amec are confirmed, only for members:

» Foreigners Commission – April 23, via conference call.

» Management Board – April 25, at Amec’s headquarters, in São Paulo, with remote access.

» Board of Directors – April 30, at Amec’s headquarters, in São Paulo, with remote access.

Confirmations of attendance must be submitted to maria.alice@amecbrasil.org.br.

Click here to access the Association’s annual calendar of meetings.

Metrus and G5 Partners join Amec

Pension fund Metrus – Instituto de Seguridade Social, and São Paulo’s financial advisory services firm and fund manager G5 Partners are the new members of Amec – the Association of Capital Market Investors. Read more

Amec supports the candidacy of Mr. Leonardo Pereira to the IFRS Foundation

In a letter sent on March 21, Amec expressed its support for the appointment of Mr. Leonardo Pereira to represent the Americas in the board of directors of the IFRS Foundation, institution responsible for preparing and disclosing international accounting standards. Read more

Association suggests improvements to the self-regulation of pension funds

Pension Funds (EFPC’s) should have their own self-regulation code soon, to be prepared by the Brazilian Association of Pension Funds (ABRAPP). On March 11, Amec’s Technical Commission analyzed the draft of the code and prepared suggestions that were sent on March 22. Read more

Indemnity to Qualicorp’s executive was harmful to the company, says CVM

José Seripieri Filho, CEO of the health benefit manager Qualicorp, signed an agreement totaling $150 million reais with the company committing himself not to sell his fifteen percent (15%) share in Qualicorp’s capital stock and not create any competing businesses for the next 8 years. The company’s shares had a sharp drop of thirty percent (30%) after the announcement and the Brazilian Securities and Exchange Commission (CVM) started proceedings to investigate the case. On April 2, the Valor Econômico newspaper announced that the regulator concluded the agreement was harmful to the company. Read more

Independent auditors should provide investors with more information, highlights Amec’s CEO

Independent auditors’ opinions rarely innovate: they are often unqualified reports that only identify the processes implemented by the companies. In general terms, auditors are too neutral and “restrained.” During an event organized by the Brazilian Institute of Corporate Governance (IBGC) in Rio de Janeiro, on March 19, Amec’s CEO Mauro Cunha stated that auditors should be more assertive and give opinions about the companies’ choices. Read more

Klabin’s royalty agreement is cancelled after investors engagement

Sogemar has a license agreement to use the Klabin brand and pays royalties on profits to the Klabin family – in 2017, such payments totaled approximately $50 million reais. This related party transaction was always mentioned in the interactions between the company and its investors and the objective was to eliminate it. Sogemar would be merged into Klabin, eliminating the agreements in exchange for a financial compensation. Read more

CODIM makes public hearing available by April 17

The Guidance Committee for the Disclosure of Information to the Market (CODIM) has made the draft on a guidance statement about the disclosure of material facts in advance available for public hearing by April 17. Read more
10º Congresso de Fundos de Investimento da Anbima
Anbima 10th Investment Fund Congress
Date: April 24 - 25, 2019
Venue: Bienal Pavilion, Parque do Ibirapuera, São Paulo, SP
Click here for information and to register.
9ª Conferência Brasileira de Contabilidade e Auditoria do Ibracon
Ibracon 9th Brazilian Conference on Accounting and Audit
Date: June 10 - 11, 2019
Venue: Teatro Bradesco, São Paulo, SP
Click here for information and to register.
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