February 1, 2021
Por Jonathan Mazon >
Just as the beginning of each year is the time when people evaluate their achievements in the previous year and decide in what aspects they will seek to improve in the year that begins, partners or investors also have an opportunity at that moment to examine how operational and financial results of their businesses reflect the alignment of management initiatives with the guidelines of the General Meeting and the extent to which corporate governance contributed to this alignment.
Bearing in mind the duties of the Board of Directors to exercise the role recommended by the IBGC of “guardian of the organization’s principles, values, corporate purpose and governance system, as its main component, (…) deciding the strategic direction of the business [and,] according to the best interest of the organization, monitoring management, acting as a link between officers and partners”; this moment of reflection helps to highlight the need for any adjustments to the Bylaws and other governance documents of the business in order to promote and facilitate the exercise of these prerogatives by the Board of Directors.
How did your company treat its Board of Directors? In relevant topics such as “transparency and access to information”, “budget and autonomy for hiring advisors” or “insider trading”, was the Board given “more”, “less”, or “just enough” resources to support the business in achieving its goals? The answers to these questions are important indicators of how much a business is committed to governance.
Pursuant to Brazilian Corporate Law, Directors have a legal duty to act in an informed manner, in good faith and with diligence, aiming at the best interests of the company. The best corporate governance practices indicate that the access of members of the Board and, when necessary, of their trusted advisors, to company information, in addition to being recommended, is necessary for the full exercise of their duty of care. In this context, advising with specialists on topics that deserve further study is part of the duty of care of a member of the Board.
As this right of access to non-public information of the company generates an asymmetry of information relative to the market, it must be subject to the adherence of these professionals to the rules of confidentiality and to the prohibition on the trading of the applicable securities. Therefore, it is also necessary to assess whether the existing corporate governance documents include sufficient legal protections to enable this access safely.
The limit for deepening and complementing information for informed and adequate decision-making by a Director is defined by the reasonableness of the company’s resources necessary to achieve this objective.
Recent precedents in Brazil and abroad demonstrate that, just as the rewards for organizations that take corporate governance seriously are the best possible in terms of reputation and appreciation in market value, the risks for those that do not are also quite relevant.
 IBGC, Code of Best Corporate Governance Practices, 2015, p. 39.
 Art. 153 of Law No. 6,404/76.
 In particular the Board of Directors’ Internal Regulations, and the Company’s Information Disclosure and Securities Trading Policies.