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University of Miami Inter-American Law Review

Abstract

Shareholders’ agreements are quite common in many jurisdictions. Theory and empirical evidence suggest that they may have a positive or a negative impact on corporate governance structures depending on companies’ characteristics and on the goals that these contracts pursue. Shareholders’ agreements may be used as Control Enhancement Mechanisms (CEM) allowing controllers to circumvent rules that favor minority investors. However, comparing to other CEM, in many countries information regarding them is scarce. Is it necessary that shareholders’ agreements in public corporations be fully informed?

We examine the case of Chile (a country that only requires to inform that a shareholder agreement exists) and compare it to Italy and Brazil cases, countries where shareholders’ agreements content is disclosed. We find out that the detail of the rules that impose or promote information might produce different results on the way that shareholders’ agreements are used. For the case of Chile, we show that its use has increased over time and that case evidence show that they may have been used to circumvent minority rights. Shareholders’ agreements play a much more important role in the control of public corporations in Chile than what has been previously discussed in corporate governance literature.

The contribution of this paper is to provide evidence in favor of the importance of mandatory rules for shareholders’ agreements disclosure and their design, not only where this information lacks, as in many developing countries, but also to reinforce the relevance of disclosure in developed markets, where the use of shareholders’ agreements in public companies is also increasing.

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