BRAZIL Law and Practice Contributed by: Vitor Henriques and Gabriela Sella, Franco Leutewiler Henriques Advogados
8.4 Independent Outside Advice Directors and officers in Brazil commonly rely on independent legal, financial and other advisory services to assist them in evaluating and nego - tiating business combinations. This advice helps directors and officers to deliver the transaction, fulfil their fiduciary duties and make informed decisions. 8.5 Conflicts of Interest Conflicts of interest involving directors, officers and shareholders are strictly regulated by the Brazilian legislation and also overseen and regu - lated by the CVM when publicly held companies are involved, in order to ensure that conflicts are adequately disclosed, managed or mitigated and to ensure fairness and protect the interests of the company and its stakeholders. In Brazil, hostile tender offers are permitted under the Brazilian legal framework. The Brazilian Cor - poration Law sets forth rules and regulations governing the conduct of tender offers, includ - ing requirements related to disclosure, fairness and shareholder protection. These regulations aim to ensure transparency and fairness in the market, and to protect the interests of minority shareholders. Furthermore, the CVM plays a crucial role in reg - ulating securities transactions and overseeing the conduct of market participants. It establish - es regulations governing tender offers, monitors market activities and enforces compliance with securities laws to safeguard investor interests. In addition to legal and regulatory constraints, the culture of corporate governance and share - 9. Defensive Measures 9.1 Hostile Tender Offers
holder activism in Brazil also influences the prev - alence of hostile tender offers. Companies often prioritise maintaining positive relationships with shareholders and stakeholders, which may lead them to pursue negotiated or friendly transac - tions rather than hostile takeovers. Overall, while hostile tender offers are permitted in Brazil, their occurrence is relatively less com - mon compared to friendly transactions due to the regulatory and legal framework, as well as cultural and market dynamics that favour negoti - ated deals. 9.2 Directors’ Use of Defensive Measures Directors and officers, as well as shareholders, have the authority to use defensive measures to protect the interests of the company and its shareholders, subject to shareholders’ liability, the fiduciary duties of the directors and officers involved, and regulatory oversight. 9.3 Common Defensive Measures Common defensive measures in Brazil include poison pills, golden parachutes, the enforce - ment of shareholder rights, forcing corporate governance based on best practices arising from self-regulatory guidelines and calling for regulatory oversight. 9.4 Directors’ Duties When enacting defensive measures in Brazil, directors and officers owe duties of loyalty, care, good faith and transparency to the company. These duties require directors and officers to act reasonably and in the best interests of the company, considering the potential impact on its business, shareholders and other stakeholders.
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