CABO VERDE Trends and Developments Contributed by: Nelson Raposo Bernardo, Joana Andrade Correia, Júlio Martins Júnior and Manuel Esteves Albuquerque, Raposo Bernardo & Associados
The adoption and effectiveness of these norms have a direct impact on the confidence of both domestic and foreign investors. When investors see that companies are subject to clear regula - tions that prevent managers from pursuing per - sonal gain to the detriment of the company, the sense of legal security and integrity is enhanced. With well-defined duties of loyalty in place, the risk of administrators entering into transactions that would be detrimental to the company (for example, contracting with themselves or related entities on unfavourable terms) is reduced. The legal requirement for the approval and disclosure of related-party transactions inhibits the prac - tices of self-dealing and other forms of abuse. The obligation to disclose conflicts and the pro - hibition against voting on matters in one’s own interest lend transparency to the management of the company. This transparency is highly valued by investors, as it allows them to assess whether the management is acting in an ethical manner. Investors – particularly foreign investors, who are often less familiar with the local business envi - ronment – seek out markets where legal secu - rity prevails. The knowledge that the legislation imposes clear fiduciary duties on administrators and provides mechanisms for accountability in cases of infringement allows for predictability. Foreign investors feel more assured that they will receive fair treatment, and that any poten - tial disputes can be resolved based on objective
rules (for example, if a director breaches their duty of loyalty, causing harm, the company or shareholders can seek redress). This confidence reduces perceived country risk and can translate into a greater propensity for investment. Concur - rently, domestic investors also gain the confi - dence to allocate their resources to local public limited companies, being aware that the rights of all shareholders will be safeguarded by the legal framework. The adoption of legal standards that are aligned with international norms (such as those promul - gated by the OECD and the World Bank) serves as a positive signal. It indicates that the country takes the protection of investors and the integ - rity of the business environment seriously. This renders the market more appealing. Drawing inspiration from international mod - els, such as the OECD Principles of Corporate Governance and the European Union directives on corporate governance, Cape Verde has the potential to forge its own path towards the affir - mation of sound practices, tailored to its specific dimensions and economic context. This adapta - tion, however, necessitates not merely the trans - position of legal norms but also the creation of enabling conditions for their realisation, through investments in training, technical capacity build - ing, the modernisation of information systems, and the enhancement of internal control bodies.
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