No artigo The (in)effectiveness of the means of restoring the rights of shareholders in the arbitration procedure, previously published in Legislação & Mercados, we carried out a critical analysis of the means of reparatory protection for shareholder rights in the Brazilian capital market with regard, mainly, to the peculiarities involving the arbitration procedure. This article continues the analysis, but this time, from the perspective of judicial procedure and aspects of Law No. 6.404/76 — the Corporations Law (Corporations Law).
Although the arbitration procedure has gained relevance and applicability year after year, the judicial procedure is still the most widespread and accessible method of conflict resolution to the population, which is why we cannot fail to analyze it from a critical perspective.
We have already mentioned that the slowness of legal proceedings is one of its main problems and that, even though specialized business courts have been created as an alternative to common courts, the resolution of disputes still takes a long time, given the complexity of the issues. involved.
The main investor redress mechanisms available in Brazil are beyond the administrative competence of the Brazilian Securities and Exchange Commission (CVM), considering that, as a rule, the municipality does not participate and in some cases is not even aware of individual legal actions involving public companies or other market participants.
In the event of collective actions for damages suffered in the capital market, Laws No. 7.347/85 and No. 7.913/89 regulate the active legitimacy of the Public Prosecutor's Office, the CVM and investor associations. However, according to a study¹, until 2007, only nine collective actions had been filed based on these laws. In a second study² even more recently, published in 2018, it was found that only two public civil actions involving publicly traded companies had been filed by the Public Ministry with the CVM acting as amicus curiae. We see, therefore, that public civil actions are not an effective protection tool for problems related to the Brazilian capital market.³.
In addition, there are other procedural requirements provided for by the Corporate Law. which still constitute a procedural and bureaucratic barrier to the pursuit of civil compensation by injured shareholders, especially minority shareholders. Let's look at an example: when the administrator's accounts are approved, his civil liability is exonerated (art. 134, § 3)4, which is why, if any subsequent illicit activity is discovered, it is necessary to annul the deliberation that approved the accounts (art. 286) so that only later can it be possible to deliberate in a general meeting on the filing of a civil liability action by the company against the responsible administrator.
When it comes to companies with a large shareholding dispersion or when corporate control is very concentrated, it is difficult for minority shareholders acting together to reach the minimum percentage of 5%, provided for by art. 159, §4 of the Corporate Law.5, to bring a civil liability action. And, even though the law gives the CVM the authority to reduce certain limits, including those provided for in art. 159, no standard has yet been issued regarding this matter6.
Once all these obstacles have been overcome, even if the result of the action handled is favorable, any amounts eventually recovered by the court decision must be transferred to the company, and not to the authors of the lawsuit, since the action is filed in the name of the company itself. Thus, the benefit received by shareholders will be indirect, with the increase in the company's assets, whose economic benefit will be distributed to all shareholders, even those who did not participate in the legal action.
In the event of filing a civil liability action against an administrator or controller, for damages directly suffered by a specific shareholder, he or she must provide security for the costs and attorney's fees due in the event the action is judged unfounded — amounts that will only be reimbursed in case of a favorable decision and up to the limit of the compensation granted. In other words, shareholders proposing a direct or derivative action must fully assume the risk of an adverse decision. In this case, the claimants will also have to bear the burden of succumbence. The result of this is a clear disincentive for shareholders to file civil liability actions against abuses by controllers and administrators.
It is true that the law provided mechanisms in an attempt to create an incentive for the shareholder to seek the effectiveness of their rights, such as the rule that guarantees the shareholder authoring the action to receive a payment from the controlling shareholder, equivalent to 5% of the total value of the action. compensation, in case of success in the action (art. 246, §2, of the Corporation Law). Even so, this rule, to this day, does not seem to represent enough of a stimulus to mitigate the risk imposed on shareholders interested in filing a lawsuit, which translates into slow processing, the insecurity inherent to corporate litigation and the burden of succumbing.
By creating requirements for the filing of a civil liability action, the legislator's intention to avoid the initiation of adventurous actions is clear, but, equally, they represent barriers to access to the judiciary. The most modern proposals to reform the Corporations Law should follow in line with the CVM's recent initiatives in order to offer appropriate incentives to shareholders who may file legitimate and well-founded liability actions against controllers, administrators and even minority shareholders who act abusively or illegally, in order to reduce costs and risks arising from pursuing damage reparation relief.
Source: Legislation & Markets (Open Capital)
1 ZACLIS, Lionel. Collective protection of investors in the capital market. São Paulo: RT, 2007, p. 178-183.
2 PRADO, Viviane Muller. The challenges for repaying investors. In: CARVALHOSA, Modesto; LEÃES, Luiz Gastão Paes de Barros; WALD, Arnoldo (coords.). The company's civil liability towards investors. São Paulo: Quartier Latin, 2018, pp. 386.
3 O study carried out by the CVM Working Group justifies the low rate of filing of public civil actions based on the excessively broad competence of the Public Ministry and the CVM, which causes them to channel their efforts in different sectors, leaving the search for compensation within the scope of the Market of Capital for private operations.
4 Art. 134. Once the general meeting has been held, if requested by any shareholder, the documents referred to in article 133 and the opinion of the supervisory board, if any, will be read, which will be submitted by the board for discussion and voting . […] § 3 The approval, without reservation, of the financial statements and accounts, exempts administrators and inspectors from liability, except for error, fraud, fraud or simulation (article 286).
5 Art. 159. It is up to the company, upon prior deliberation of the general meeting, to take civil liability action against the administrator for losses caused to its assets. […] § 4 If the meeting decides not to promote the action, it may be proposed by shareholders representing at least 5% (five percent) of the share capital.
6 Nevertheless, the CVM submitted to the public hearing a draft instruction that sets a scale reducing, depending on the share capital, the minimum percentages of shareholding necessary to bring a derivative action against the administrators, and to bring a liability action against the controlling company. , without providing a deposit. The deadline for comments with suggestions and comments on the matter ended on 06/12/2019 and it is likely that a new CVM instruction regulating the matter will be approved.