Allocation of power between the General Meeting and the Board of Directors: an empirical study of the articles of association of Brazilian public companies

Abstract

The purpose of this study is to assess to what extent the articles of association of Brazilian public companies have allocated managerial powers over the company between the general meeting and the board of directors. Historically, at least in comparative terms, Brazilian corporate law has privileged, with respect to the main corporate resolutions, the incumbencies of the general meeting, as the supreme decision-making body of the company, to the detriment of the board. However, at the same time, the statute confers a considerable margin of discretion to shareholders to allocate part of this power to the board, by means of the articles of association. Assessing to which extent this allocation has been carried out in practice is interesting primarily due to the evolution of the global movement on corporate governance, and the reforms implemented in the last 15 years in Brazilian capital markets statute and regulation, which were directed at strengthening the board's role in conducting and monitoring corporate affairs by means, for example, of the role of independent directors. To that effect, the study shall involve an analysis of the corporate documentation of companies listed in the São Paulo Stock Market (BM&FBOVESPA), pursuant to criteria which allow one to determine in which cases a board shall have more or less power to decide on the direction that a company's business fair should be taken in.