Brazil has a governance system based on concentrated family ownership, which leads to higher risk to minority interests as it imposes certain reasonable limits on external financing and on challenging management.
In all countries across the globe, institutions are currently engaged in debating corporate governance practices. In Brazil this is still a recent feature as it started in 1999 through the creation of the Brazilian Institute of Corporate Governance (IBGC) and the first Brazilian code of best corporate governance practices.
In order for companies to include the major good practices (transparency, accountability and equity) in their governance guidelines, the board of directors is required to show their position in the company, especially in regard to electing the executive board, supervising and evaluating management's performance, establishing strategies for the company and choosing the independent auditors.
According to the Code of Best Practices from the Brazilian Institute of Corporate Governance (IBGC), there are six chapters that address practices and recommendations for each body under the organisations governance system, covering:
- property (shareholders / members)
- board of directors
- management
- independent audit
- supervisory board
- conduct and interest conflicts – deals with standards of conduct and behaviour applicable to one or more agents, in addition to proposing policies and practices to avoid conflict of interest and misuse of assets and information related to the organisation.