BRAZIL Law and Practice Contributed by: Vitor Henriques and Gabriela Sella, Franco Leutewiler Henriques Advogados
11. Activism 11.1 Shareholder Activism
9.5 Directors’ Ability to “Just Say No” Directors and officers in Brazil have the discre - tion to reject a business combination or take action to prevent it subject to personal liability if the business combination does not meet the company’s best interests or if it breaches pro - visions contained in the company’s corporate documents and the law.
Shareholder activism is an important force in Brazil, particularly in publicly held companies, where activists seek to influence corporate governance, strategic decisions and financial performance. However, Brazilian laws and the regulatory framework lack important class action mechanisms, which restricts shareholder activ - Activists in Brazil may seek to encourage com - panies to enter into M&A transactions, spin-offs or major divestitures to enhance shareholder val - ue. In some cases, the pandemic impacted cor - porate activism strategies due to the increasing necessity of maintaining companies’ resilience, risk management and long-term sustainability. 11.3 Interference With Completion Activists typically seek to influence the outcome of announced transactions in Brazil, although their capacity to disrupt completion hinges on several determinants. These include the level of shareholder backing, the attainment of regula - tory approvals and the legality of their interven - tions. ism in corporate matters. 11.2 Aims of Activists
10. Litigation 10.1 Frequency of Litigation
Litigation in connection with M&A deals in Brazil is relatively common, particularly in cases involv - ing disputes over deal terms, purchase price adjustment, valuation and indemnification. 10.2 Stage of Deal Litigation may arise at various stages of the deal process in Brazil, including during negotiations, corporate approvals and post-closing. 10.3 “Broken-Deal” Disputes Since most M&A deals are ruled by arbitration and Brazilian arbitration law dates back to 1996, many lessons have been learned from disputes between parties with pending transactions in early 2020. Since then, parties and advisers have placed increased attention on contractual provi - sions and law interpretation, the enforcement of break-up fees and other important matters.
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