The Insertion Of Corporate Governance In Brazilian Companies

It is usually common sense to think that family businesses conflicts arisen throughout time can be solved by the understanding among founders, shareholders and successors. This procedure, however, more often than not proves insufficient, and this is where the so-called "Corporate Governance" comes into play, whereby the principles and practices apply to any type of organization, regardless of its form of business organization, type of control and size.

The role of Corporate Governance is critical to the company performance management, since it is a set of practices eventually aimed to optimize its performance by protecting all stakeholders (such as employees, investors, creditors, etc.), making access to capital easier. The lack of Corporate Governance can scale up conflict and even put the life of a company into jeopardy due to several factors, such as, among others, lack of transparency (something essential in Corporate Governance delivery), distorted handling by the management personnel in charge, weak understanding of the business among family members. These are factors commonly not found within the company's management yet should be there.

It is important to highlight that the corporate governance allows owners (shareholders or members) to manage their company strategically and effectively supervise their executive board. To succeed in their succession process, it is critical that managing officers be aware that one of the major problems faced by family businesses arises when the family increases and dilution of power and property inevitably occurs, by way of distribution among various members of the family, who do not always share the same ideology and business plans. Accordingly, having awareness and jointly adopting Corporate Governance practices is indispensable to obtain qualified advice on keeping the shareholders' willingness in consolidating into a business Group while sustaining the ability to compete in the market.

For the major good practices (transparency, accountability and equity) to be included in these companies' governance guidelines , the Board of Directors is required to show their position in the company, especially with regard to electing the Executive Board, supervising and evaluating management's performance, establishing strategies for the company and choosing the independent auditors.

According to the Code of Best Practices from the Brazilian Institute of Corporate Governance (IBGC), there are six chapters that...