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In the field of corporate governance, PREVI’s militancy established a standard that became a sort of quality stamp recognized by the market. PREVI’s tough performance aims to build partnerships in the pursuit for better practices of corporative governance and identifying synergies between companies in order to maximize values for stockholders, to strengthen bonds between shareholders and the board of directors, and to promote economic growth.
In October, PREVI published the PREVI Code of Corporate Governance Best Practices for Real Estate-Based Undertakings. The code includes some of the principles that guide good corporate governance: transparency, clarity and precision in rendering accounts, equitable treatment of co-owners, and socially and environmentally responsible practices in real estate management. The code may be a touchstone for specific regulation for the real estate sector, which has been increasing in the last years. It is the second code published by PREVI. The first code, issued in 2008, refers to corporate governance.
Regulatory standard and better market practices
PREVI participated in the creation of a document forwarded to the association ABVCAP/Anbid, suggesting modifications in the regulatory standards of governance funds. The aim is to promote standardized practices of participating institutions regarding the constitution and operation of investment funds, in line with the main Brazilian and international standards of private equity and venture capital. This is the first private regulatory standard developed by two market associations.
PREVI also made contributions to public hearings held by the Securities and Exchange Commission of Brazil (Comissão de Valores Mobiliários - CVM) and by the Brazilian Institute of Corporate Governance (Instituto Brasileiro de Governança Corporativa - IBGC) in order to disseminate and improve good governance practices in the Brazilian market.
Costa do SauÍpe
In 2009 the resort saw many adjustments designed to improve financial performance. There were changes in the management of Sauípe S/A, which began directly assuming the operation of units that were previously operated by Marriot, Accor and Pestana. Promotion packages exclusive to BB employees and pensioners were among the many new initiatives to raise hotel performance.
In terms of value, Vale is the main asset of the PREVI portfolio. PREVI’s participation in the company is estimated to be worth R$ 31.08 billion.
PREVI closely follows Vale’s performance, which disclosed a R$ 10.2 billion profit in 2009. The result was 51.8% below last year’s. This reduction is due to the effects of the global financial crisis, which led to the setback of iron ore prices and the reduction in the volume of exports. The result, however, coincided with market analysts’ expectations. Moreover, the recovery of the world economy, particularly China’s economy, has triggered the recovery of the company’s value.
Neoenergia
Neoenergia launched the hydroelectric power plant Baguari (in the state of Minas Gerais), in partnership with Cemig and Furnas, and the small hydroelectric centers Pirapetinga and Pedra do Garrafão, located between Rio de Janeiro and Espírito Santo states. The Neoenergia group and the Banco do Brasil Foundation (Fundação Banco do Brasil - FBB) signed a partnership deal for the donation of fluorescent lamps and new fridges. With the partnership, the Foundation and Neoenergia wish to extend energy-efficient actions to the communities attended by the Foundation in the states of Pernambuco, Bahia and Rio Grande do Norte.
CPFL
CPFL successfully managed to sell 188MW wind power in an auction in December. This year, it acquired 51% participation in EPASA, which owns two hydroelectric plants in the state of Paraiba representing 173MW power.
The first hydroelectric unit in the Usina Hidrelétrica Foz do Chapecó, located in the state of Santa Catarina, is predicted to start operating in 2010. Foz do Chapecó, Epasa, the Wind Power Parks (Parques Eólicos) and Biomassa will add 800MW extra power to CPFL, which will become the second largest private generator in Brazil, boasting 2.600MW.
Paranapanema
The company consolidated the corporate, operational and financial reconstruction initiated in December 2006. The holding’s vast debts were practically all paid.
The reparation continued into 2009 with corporate restructuring and handling of pending tax issues. The controlled company Caraiba obtained fiscal incentives of ICMS tax from the government of Bahia (Programa Desenvolve). Paranapanema has been working to implement the migration from Level 1 to Novo Mercado da Bovespa, where companies with top level governance are.
After this process, which involved debt conversion and selling of assets, PREVI’s 49.08% participation was reduced to 24.06%. However, due to the company’s increased value, there were significant gains.
Members of the Board participate in the Annual Meeting and Chats
Aiming to recycle knowledge and promote the exchange of experiences, PREVI held the 10th Meeting of Board Members in Costa do Sauipe, in August. The theme was “Challenges of Risk Management in the Global Financial Crisis”.
In order for relevant issues concerning the field of corporate governance to be kept in the agenda, eight online chat sessions with elected board members were held in their companies throughout the year. Moreover, the development program included a course offered to board members, called “Structure and Analysis of Financial Statements”.
PREVI appointed 176 candidates to participate in the supervisory board and board of directors of participating companies, and managed to elect 159 board members.
Participation in general shareholder meeting
PREVI participated in 60 shareholder meetings, always promoting best practices of Corporate Governance, privileging transparency and encouraging minority stockholder to pay attention to company practices and finances.
PREVI encourages more companies to use shareholder meeting manuals
One of the companies that began implementing the procedure, Bradesco published its proxy statement (i.e., manual for participating in shareholder meetings) while calling the ordinary meeting on March 10th 2009. Weg S.A. did the same for its shareholder meetings, which occurred on April 6th 2009. It is worth highlighting PREVI’s active stance in encouraging these practices by member companies.
Member of supervisory board in Souza Cruz
After five years of attempts and appeals at the Securities and Exchange Commission of Brazil (CVM), PREVI managed to implement the supervisory board and, for the first time, a member of the board and their respective proxy were elected with our institutional support. The result rewards a long campaign that led CVM to recognize and legally endorse the right of a minority stockholder to request and assure the implementation of a supervisory board in companies.
