Mergers and acquisitions in public limited companies: the abuse of power of the controlling investors in prejudice of the minority investors rights

• Grant number: 12/14630-3
• Support Opportunities: Scholarships in Brazil - Scientific Initiation
• Start date: April 01, 2014
• End date: December 31, 2014
• Field of knowledge: Applied Social Sciences - Law - Private Law
• Principal Investigator: Luiz Antonio Soares Hentz
• Grantee: Monize Maioli Caetano
• Host Institution: Faculdade de Ciências Humanas e Sociais (FCHS). Universidade Estadual Paulista (UNESP). Campus de Franca. Franca , SP, Brazil

Abstract

Seeking to achieve greater competitiveness in an increasingly globalized market, national and international companies began a constant race for knowledge and tools that would add to not only the optimization of production, or the development and acquisition of new technologies but also to obtain increasing market-shares. Currently, some of the most sought after of these tools are the mergers and/or acquisition processes. Furthermore, the increased access to the Stock Exchange Market in Brazil has spread the interest of anonymous investors in the role of minority investors in large companies, thus increasing their importance as a source of capital and financing for these enterprises. During these transactions, the role of the controlling investor becomes crucial to the good development of the negociations since its privileged position allows it make important decisions on the company's future. Given the turbulent scenario during negotiations, in which every investor craves its share of eventual profits, the conflicts of interest are inevitable. Commonly, the controlling investor, abusing of its power and seeking blindly its own gain, makes illegal decisions violating the minority inverstors' rights. The consequences of these quarrels between controlling and minority investors reflect in Brazilian economic and social development. Therefore, a specific study in this area becomes highly relevant for the amount of information and possible solutions it can supply current and future investors.