Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Tuesday, June 27, 2006

Brazil setting world class standards …in governance AND football.

So to Brazil for the 3rd World PR Congress, where, in the midst of the football, business continues to focus increasingly on best practices in governance.

And a remarkable story emerges of how public companies, investors, and advisors are cooperating to create best practice disclosure. This is a model of cooperation between all participants in the capital markets process that other countries could well copy.

Much of the market was looking to the domestic regulator, the Comissao de Valores Mobiliarios to develop world standard disclosure practices. This continues to be seen as a key to attracting investment dollars from overseas.

However, many were disappointed when in a recent review, the existing law on disclosure practices were retained. These include minimum disclosure through publication of an advertisement (publicidade legal) in a national newspaper.

Enter less than 1 year ago,CODIM, the Committee for Disclosure Recommendations. This – to my knowledge – unique organisation brings together companies through their representative organisation ABRASCA, Investor Relations professionals (IBRI), analysts (APIMEC), small shareholders (ANIMEC), investment banks, (ANBIDI), brokers (ANCOR) the corporate governance institute (IBGC) and BOVESPA the local stock exchange.

CODIM’s aim is to codify a set of best practices such as on results conference calls, the quiet period, what to do in one on one meetings etc. This is leading to a set of voluntary recommendations, with which of course companies will be free to comply – or not.

And the reaction of CVM the regulator? Well they are watching from the sidelines as this new set of practices emerges. But don’t be too surprised, say the locals, if these recommendations wind up being endorsed – or even adopted – by the local regulators.

Which bodes well for Brazilian companies looking to develop global investment profiles and world class governance processes. And a not bad football team.


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