1. 3rd Latin American Corporate Governance Roundtable
Recent Corporate Governance Developments
Maria Helena Santana
São Paulo Stock Exchange - BOVESPA
April 2002

2. Novo Mercado Commitment with good corporate governance
Private sector initiative, based on and enforced through a contract with BOVESPA
Adhesion is voluntary and market driven
Companies committed to the highest standards of corporate governance
Set of rules over and above the Corporations Law reflecting market demands and requirements

3. Legal Reform Corporations Law & CVM Law
Preferred shares: the new Law assures genuine privilege for preferred shares (although not tag along or voting rights)
Tag Along rights: the purchaser of a controlling interest must make a tender offer to all the shareholders with voting shares (ONs) at 80% of the price paid for the controlling shares
Delistings: tender offer at ‘fair’ value: either book value, market value of the net worth, discounted cash flow, market comparables, stock price on the market or other criteria acceptable to CVM
General shareholder meetings: minimum of 15 days notice, with the possibility of CVM interference to postpone the meeting

4. Legal Reform Corporations Law & CVM Law
Board of Directors: Non-controlling shareholders representing at least 15% of the voting shares and preferred shareholders representing 10% of the total capital are allowed to elect board members (to be fully phased in by 2006)
Arbitration: bylaws may provide for resolution of disputes through arbitration
Criminal offenses: manipulation and insider trading
Strengthening of the CVM: operational and budgetary independence to CVM, five-year terms for the Commissioners

5. Novo Mercado Commitment with good corporate governance
Only voting shares: one share, one vote
Full tag along rights
Delisting: public tender offer at economic value
Board of Directors: unified 1 year terms and a minimum of 5 members
Mandatory use of arbitration for shareholder/company disputes
25% minimum free float

6. Only Voting Shares
Rights to Investors
More Disclosure
Rights to Investors
More Disclosure
More Disclosure

7. IGC x Ibovespa Compared Performance

8. Trading value Participation of the corporate governance segments15 17 19 20
# of companies

9. Market Capitalization Participation of the corporate governance segments15 17 19 20
# of companies

10. Novo Mercado BOVESPA’s Perception
The standard is set:
the only model for new listings that is being accepted by the market (domestic and international investors, underwriters) is the Novo Mercado
only very specific IPO cases will come to the Level 2
Level 1 and Level 2 are real market requirements for the already listed companies
Minimum listing standard for the BOVESPA main board (2002): Level 1