Meeting could risk members elected by unbundled vote; board elected Magda Chambriard as new CEO
05/24/2024
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Investors’ move is motivated by concerns around the oil giant’s future following the dismissal of CEO Jean Paul Prates — Foto: Leo Pinheiro/Valor
Foreign shareholders are joining forces to gather 1% of Petrobras’s capital stock to ask the state-owned company’s general secretariat to call an extraordinary general meeting. By the end of the afternoon on Thursday (23), the required percentage of the capital had not been reached. The move is motivated by concerns around the oil giant’s future following the dismissal of CEO Jean Paul Prates and threats to the company’s governance due to internal changes in the composition of advisory committees to the board of directors, largely occupied by members linked to Minister of Mines and Energy Alexandre Silveira.
The Petrobras board met on Friday (24) and elected Magda Chambriard as a director and the company’s new CEO.
Holding a shareholders’ meeting in the short term would put at risk the terms of all board members elected by the unbundled voting system in the April 25 election, including all those representing the majority shareholder—the federal government—including Ms. Chambriard.
The Brazilian Corporation Act (6404/76) provides that a meeting may be called by shareholders representing at least 5% of a company’s capital stock. However, in 2020, the Securities and Exchange Commission of Brazil (CVM) made the quorum more flexible. In the case of companies as large as Petrobras, it reduced the minimum percentage to 1% of capital stock, facilitating minority shareholders’ moves. This rule is set under CVM’s resolution 70.
In practice, if shareholders comply with the legal requirement, the company cannot prevent the meeting from taking place. If it attempts to do so, the CVM could order that a meeting be called, a person familiar with the matter said.
The possibility of names appointed by the federal government being vetoed in a new election was opened by a recent decision by the Federal Supreme Court (STF) confirming the constitutionality of the State-Owned Companies Act. According to the law, some of the members appointed by the federal government could be barred due to a conflict of interest as they hold concurrent positions in ministries and at Petrobras.
Some names that could be barred in a possible new election include chairman Pietro Mendes, Renato Galuppo, Bruno Moretti, Rafael Dubeaux, and Vitor Saback, in addition to two minority directors, Marcelo Gasparino and Juca Abdalla. It is also uncertain whether Ms. Chambriard would pass the scrutiny of the law. Soon after Mr. Prates was dismissed by President Lula, last week, Petrobras hastened to say that the executive’s resignation as a board member would not require calling an extraordinary general meeting. It would likely wait until the next shareholders meeting, possibly the April 2025 Ordinary General Meeting. The decision was interpreted at the time as a maneuver by the government to avert questioning of its candidates.
A financial market analyst pointed out that the request if confirmed, could create concerns in the government, as its members could be barred from being re-elected under the State-Owned Companies Act. A possible new election would allow for a change of conflicting board members, which could improve the state-owned company’s governance and reveal the strength of minority shareholders, the source said.
“In the event of a new meeting, the Supreme Court rule applies,” says a lawyer familiar with Petrobras-related matters. “With a new election, there is no reason to protect the rights of those who the Supreme Court said is incorrect. There is no doubt that the State-Owned Companies Act must apply,” he adds.
The Petrobras case is an opportunity to assess the practical effects arising from the Supreme Court’s decision, said Leonardo Ugatti Peres, a lawyer at Azeredo Santos & Ugatti Peres Advogados. While there will be arguments that the law will apply in the case of a new election, on the other, it may be questioned whether, in the case of re-election, the changes made by the STF should prevail. These adaptations ensured that the rules would not apply in cases where positions were previously occupied. “The issue will be debated. Those who are in office will claim they should stay.”
Lawyer Maurício Moreira Menezes, partner at Moreira Menezes, Martins Advogados, emphasizes that the law establishes that minority shareholders must have at least 5% of the capital to request a meeting, while CVM resolution 70 reduced this share to 1% for large companies, such as Petrobras: “These shareholders can request a meeting with duly substantiated reasons and, if the management fails to call it, due to inaction or refusal, shareholders can call it on their own,” Mr. Moreira explains. He says there is no penalty provided for managers if they fail to call the meeting following a request from minority shareholders.
Regarding the specific Petrobras case, Mr. Menezes says members appointed by the federal government who may be in a conflict of interest will no longer be protected by the preliminary injunction issued by then Justice Ricardo Lewandovski suspending sections of the State-Owned Companies Act. A recent decision by the Supreme Court overturned this protection. “In the event of a new election, the federal government will have to appoint names that comply with the legal requirements,” the lawyer said.
Alexandre Calmon, partner and co-leader of the energy sector at Campos Mello Advogados, points out that, in theory, a new extraordinary general meeting would not be required to re-elect the entire board, just Ms. Chambriard, as she succeeds Mr. Prates in a seat that represents the government as controlling shareholder. “I don’t see a violation of the unbundled vote,” Mr. Calmon says. As for the call intended by the shareholders, if Petrobras refuses to call an extraordinary general meeting, the shareholders could go to court.
*Por Maria Cristina Fernandes, Juliana Schincariol, Rafael Rosas, Fábio Couto, Kariny Leal — São Paulo and Rio de Janeiro
Source: Valor International