BRAZIL - Institutional investors have banded together to urge the Brazilian securities regulator, the Commissão de Valores Mobiliários (CVM), to provide greater legal protections for minority shareholders.
F&C said while the investors had no objection in principle to the combination, they were concerned it would come at the expense of minority investors in both Aracruz's voting and non-voting stock.
In a letter to the regulator, F&C made the case for high standards of corporate governance, arguing that both companies and investors stood to benefit from more effective and accountable management, a lower cost of capital, and more efficient capital markets.
"As long term investors in Brazil, we have welcomed the recent progress of many Brazilian companies to protect the rights of shareholders, as this has contributed to the country's rising reputation in the global capital markets", said Karina Litvack, F&C's head of governance & sustainable investment.
"We are asking the CVM to encourage the two parties in this specific case to act voluntarily to protect minorities. But ultimately, what is most important is that the CVM re-evaluate the existing regulatory framework so as to restore global investor confidence in the Brazilian capital markets."
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