November / 2018
One of the great milestones of the 21st Century in Commercial Law is the ascent of compliance. The term comes from English, from the verb “to comply”, and is generally understood as a conformity with legal and general rules. In Brazil, the matter started to become a trend after substantial corruption scandals, notably “Mensalão” and “Lava-Jato”, which resulted in a rather shy legislative creation on the subject; but, at the same time, putting a spotlight on it among the legal community.
One of its major features that is of the greatest relevance, sometimes placed as something within compliance (or vice versa), sometimes as something that walks along with it, is corporate governance. The term alludes, succinctly, to conformity with business ethics, especially in relation to its shareholders, managers, and the corporation's stakeholders. Although Brazil adopts a moderate dichotomy between compliance (obedience to legal and general rules) and corporate governance (ethical congruence) – perhaps because of the minimal and sparse legislation on the matter –, many countries put one thing inside the other, considering the big picture.
European countries, mostly, have been greatly concerned with the spread of corporate governance, especially after the Maxwell (1991), Parmalat (2002) and Eurotunnel (2004) scandals, which swept across the European continent. Seeking protection against corporate governance scandals, the German Ministry of Justice created, in 2001, the Corporate Governance Code Commission, which became in charge of elaborating the German Corporate Governance Code (Deutscher Corporate Governance Kodex). The Commission operates until today, being responsible for updating the Code, and is constituted by 12 (twelve) highly qualified people in the legal, economic, financial and corporate area.
The Code is extremely interesting because it has three types of rules and could be replicated in other countries. First, there are the mandatory rules, which are mere copies of the country's commercial and corporate law – codifying them. There are also the recommendation rules, always accompanied by the verb "shall" (soll), which must be justified in the company's Declaration of Compliance (Erklärung zum Corporate Governance Kodex) if not followed. Lastly, there are the suggestion rules, revealed by the use of the verb "should" (sollte), which do not need to be justified in the Declaration.
The Declaration of Compliance is mandatory under the § 161 of the German Stock Corporation Act (Aktiengesetz) and, if it contains any false information, the person responsible for its presentation may be arrested, as prescribed by the § 331 of the German Commercial Code (Handelsgesetzbuch). The most relevant points about the Declaration and the rules contained in the Corporate Governance Code are not just their legal obligation: there is great pressure from shareholders, and all other stakeholders, for the company to effectively follow the provisions of the Code, even those that are not mandatory. There is, therefore, a certain coercion by the market itself, in addition to the legal requirement, which arises from the existence of a Code with comprehensible and straightforward rules of corporate governance and, as a consequence, of compliance.
From the German experience, it can be noted that the codification of norms of corporate governance and compliance (including the creation of non-mandatory rules, which are followed by the vast majority of corporations) has brought great advances to the ethical conduct and conformity to rules of German companies. Brazil, considering its not only scarce subject - but also, sparse – legislation on the subject could, perhaps, learn a lesson from Germany and edit a Code by standardizing and creating new rules for corporate governance and compliance in the Brazilian legal system.
Vernalha, Di Lascio, Mesquita & Associados is at the disposal of its clients for more information on the subject.