Ownership and Control Structure of Brazilian Companies

Abstract

This paper analyzes the structure of ownership and control of public Brazilian companies using data from 325 companies listed at the Sao Paulo Stock Exchange. We show a high degree of ownership concentration. The major shareholder has, on average, 41 percent of the equity capital, while the five major have 61 percent. Concentration occurs mainly with voting shares with 62 percent of the companies having one shareholder with more than 50 percent of the voting shares. Actually, the violation of the one share-one vote rule with the use of non-voting shares is very common. Only 11 percent of the companies do not have non voting shares and the companies have, on average, only 54 percent of their equity capital as voting capital. We also analyze the indirect ownership structure. Pyramiding structure is not commonly used as a way of violating the one share - one vote rule. Control is maintained through more than one tier. We also show the importance of different shareholder classes. Corporations are the main investor category in the direct ownership structure while individuals are more important when indirect control is accounted for.