The corruption sham of Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) has led to a series of innovations or rather, proposals so as to regulate the entire market. The stock exchange operator of Brazil, along with the market regulator, proposed a range of suggestions and recommendations. These will pertain to look up the corporate governance, primarily at the companies that are functioning under the state.
The publically-traded companies under list of recommendations
At present, there are a total of 30 publically traded firms in Brazil, which are functioning under the governance of the State. Eight out of these 30 companies are listed in the Ibovespa stocks index of Brazil, which is considered as a benchmark in itself. The presentation was given at São Paulo stock market on April 2, 2015. The presenter was head of the regulator of Brazil, Leonardo Pereira as well as President of BM&FBovespa, the stock market operator, Edemir Pinto.
These recommendations mainly concern better controls within the management, along with better transparency. However, the presentation cleared that though these new proposed rules will prove beneficial, but it is not mandatory to implement them at the state-run companies. These regulations are laid down primarily for the state-run firms, whether they are listed publically or not. The presentation, according to The Wall Street Journal, said that these companies are representative of 1/3rd of the average trading volume every day.
Transparent practices required in Brazil
The proposals uprooted as the most important state-run oil company, Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) came under scrutiny for its bribery scandal. The scandal also has some of the prominent names of the politicians involved in it.
In regard to the new rules proposed, Leonardo Pereira said that a range of issues of this company could have been toned down, had there been more transparency in the management practices.
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