Below are key takeaways from ISS’ recently released 2024 Latin America Proxy Season Preview. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Governance Exchange and its Report Center tab and to corporate subscribers by logging into Governance Analytics then selecting the Governance Exchange and the Report Center tab.
- Slower Regional Growth Expected Ahead: GDP Growth in the Latin America and Carribbean region is predicted to slow from 2.2 percent in 2023 to 1.6 percent in 2024 as the region faces both external and internal risks. On the other hand, inflation is expected to decline to around 4.3 percent this year, from 6.8 percent in 2023.
- Mexican Market Law Reform: At the end of December 2023, a reform to Mexico’s Stock Market Law went into effect. The reform is aimed at loosening regulations for companies seeking to go public, with the hope that more small- and medium-sized businesses will gain access to financing. Mexico’s main stock exchange has not seen an IPO in the past six years.
- Meeting Concentration: Over recent years, shareholder meetings have become increasingly concentrated in the final four days of April, the de facto end of proxy season in the region. In the 2023 proxy season, approximately 65 percent of Brazilian meetings and 44 percent of Mexican meetings covered by ISS took place in these four days. The trend is expected to continue in 2024.
- Governance of State-Controlled Companies: In Brazil, the strides made in enhancing the governance of state-controlled companies, put in place after a corruption investigation uncovered a vast bribery and bid-rigging scheme centered primarily on the oil-giant Petroleo Brasileiro SA (Petrobras), seem to be in jeopardy. Recent actions by the executive, legislative, and legal branches may significantly undermine such improvements.
- IFRS Sustainability Disclosure Standards in Brazil: In 2024, IFRS Sustainability Disclosure Standards become part of Brazil’s regulatory framework, allowing Brazilian companies to prepare and disclose their financial information reports related to sustainability using these international standards. The adoption of the new framework, which begins on a voluntary basis in 2024, will become mandatory for all publicly-traded companies in Brazil in 2026.
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By: John Reidy, Samuel Carvalho, Ana Luiza Farias
