Abstract
Over the last 20 years, the discussion and prime drivers of change in corporate governance in Latin America have been the evolution of regulatory frameworks, the drafting of self-regulatory initiatives at a country level, as seen through the adoption of governance codes, and only lastly, as a result of the pressures brought to bear by institutional investors. However, beyond the regulatory frameworks that have evolved in the region, wide-ranging discussion has also been promoted through multiple initiatives led mainly by multilateral organizations, such as the OECD, CAF, IADB, and the WORLD BANK. This chapter provides the reader with a comparative summary of the principal legal and practical aspects of corporate governance in six major Latin American economies, further details and local flavors of which can be found in each country chapter.
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Notes
- 1.
Needless to say, CG should not be presented in Latin America, nor in any other region in the world, as a subject created 20 years ago. Nevertheless, the classical corporate agency problem has been present for a long time and has been addressed through Corporate Law via the board’s fiduciary duties.
- 2.
Argentina, Brasil, Chile, Colombia, México, and Perú.
- 3.
For further information, the reader is referred to the country-specific chapters, from which this information has been extracted.
- 4.
As there is no legal obligation to adopt the code’s Guidelines, in the “comply or explain” system, companies may choose to implement the recommended practices, but it is mandatory to disclose the Guidelines adopted and explain why the remaining Guidelines were not adopted. Similarly, the “comply or not and explain” system seeks to strengthen the compliance dimension by requiring companies to explain both the Guidelines not adopted and those adopted.
- 5.
Source: OECD - Strengthening corporate governance codes in Latin America (2016).
- 6.
In 2017, the Comisión del Mercado Financiero (CMF) replaced the Superintendency of Securities and Insurance (Superintendencia de Valores y Seguros -SVS) as the regulatory entity of securities, insurance, and banking industries.
- 7.
2021 OECD Corporate Governance Factbook.
- 8.
Limits on investments and lack of proxy voting mechanisms.
- 9.
Short-term investments horizons, free-rider problems, ownership patterns prevalent in the market, conflict of interests, institutional investors’ internal governance problems.
- 10.
Chile, Colombia, Peru, and Mexico.
- 11.
- 12.
After 2010, the Regional Roundtable is held every 2 years.
- 13.
As the Roundtable’s manager, Daniel Blume, noted, “By meeting annually either in plenary form or through Task Forces focused on specific issues, the Roundtable has helped the region’s regulators and market participants to understand the latest trends in global markets and to continue to adapt their national frameworks to ensure that they are consistent with global corporate governance standards including the G20/OECD Principles of Corporate Governance as last revised in 2015.”.
- 14.
See the OECD report on Corporate Governance of Company Groups in Latin America (2015).
- 15.
Due to the importance of State-owned enterprises for the region CAF and OECD created a specific type of Network only for State-owned Enterprises and governments acting as owners.
- 16.
“The years following the 2008 global financial crisis saw a global shift in capital from US and European markets toward emerging markets in Asia. The Latin American and Caribbean (LAC) region has not benefited from this shift. Domestic markets in the region have struggled to attract new companies to go public, which means that these markets have remained highly concentrated around a relatively low number of listed companies largely dominated by company groups” (OECD, 2019).
- 17.
Currently known as “B3.”.
- 18.
Per information available on the B3 website, last consulted on 14th October 2021.
- 19.
Under the current circumstances, we understand this statement may be seen as controversial; however, making an overall analysis of the last two decades, we consider that in the countries analyzed in this study (Argentina, Brazil, Chile, Colombia, Mexico, Peru), the general tendency has been for national governments to be “pro,” or at least, neutral to business development.
- 20.
At the time of writing, the region is facing a profound crisis primarily relating to the consequences of the COVID-19 pandemic.
- 21.
Nicholas Christakis on the three shifts of the world after the pandemic (The Economist, 2021).
- 22.
Please note that we are using wisdom and not knowledge to emphasize the integral contribution that a board of directors can make to a business or a non-for-profit organization.
- 23.
Mainly generation Z and millennials that will be the main percentage of the workforce in these years.
- 24.
Few local initiatives are already incorporating this new governance landscape, such as the Corporate Governance Guidelines for private enterprises (Guia de Buenas Prácticas de Gobierno Corporativo para Empresas Competitivas, Productivas y Perdurables—2020) from the Bogotá—Colombia Chamber of Commerce, structured with the technical advice from Governance Consultants.
- 25.
As we are seeing, the capital markets are suffering a global delisting problem associated with several causes.
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Bernal, A., Rojas, C., Mora, M. (2023). The Latin American Corporate Governing Landscape—Its Past, Present, and Future. In: Callund, J., Jiménez-Seminario, G., Pyper, N. (eds) Corporate Governing in Latin America. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-85780-6_4
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