NOTICE TO THE MARKET: THE “SUPER PREFERRED SHARES”

March 19, 2015 – AMEC – the ASSOCIATION OF CAPITAL MARKET INVESTORS – announces to the Capital Market stakeholders that its Advisory Board has approved the publishing of this notice as a result of the resurgence of discussions related primarily to discriminatory policies and disproportional treatment among different classes of shareholders.
The capital market has been evolving by demanding that companies and their controlling shareholders adopt good corporate governance practices based on principles such as transparence, equity, accountability, and corporate responsibility. However, the importance given to the principles aimed to ensure a balanced relationship among shareholders seems to have been overlooked and, unfortunately, several transactions to ensure disparities, mainly among common and preferred shareholders, have been created and suggested.
There has been a number of attempts to revitalize preferred shares through the use of the so-called “super preferred” shares. The name given to this type of share is related to the equity rights they are entitled to. Although deprived of voting rights, each ‘super preferred’ share would correspond, in economic terms, to lots of common shares.
AMEC’s members understand that the alignment of interests is of utmost importance to preserve the rights of minority shareholders. It was with this spirit that Novo Mercado was created and the Corporate Law was reviewed in 2001. For AMEC, the political power must always be related with the capital invested. Only this balance, together with good corporate governance practices, assures the creation and preservation of value for all shareholders, with equity, thus fostering the development of the capital market.
As much as it is known that there is no perfect formula and that only the company is able to define what it’s better for itself, it’s essential to have a regulatory structure to set limits to the financial creativity, which must always be based on the proportionality and reasonability with a view to avoiding the creation of structures or actions that damage the market and the companies themselves.