Copasa approves golden share for Minas Gerais state

Shareholders of Brazilian sanitation company Copasa approved granting exclusive prerogatives to a special preferred share, or golden share, held by the State of Minas Gerais. The meeting gathered investors holding 79.9% of the company's voting capital, and the measure passed with 73.5% of the votes cast.

The golden share grants the Minas Gerais government the exclusive right to elect one member to the board of directors and one to the fiscal council in separate votes. It also retains veto power over corporate name changes, headquarter transfers, and modifications to the 45% voting limit per shareholder or economic group, while requiring a qualified quorum in a special meeting for any changes to these rights.

The approved bylaws also incorporate a poison pill clause that triggers a mandatory tender offer if an investor acquires more than 45% of the share capital, requiring a minimum premium of 150%. However, shareholders included a transition rule exempting any buyer or consortium that acquires 30% or more of the capital in the secondary auction of the privatization offer led by Minas Gerais from launching this initial mandatory offer.

BNDESPar voted against expanding the golden share rights, lowering the statutory minimum of independent board members from 25% to 20%, and fixing the board at nine members, citing corporate governance concerns. Despite this opposition, lowering the independent board member floor passed with 74.81% support, and the nine-seat board structure was approved with 97.72% of the votes. On September 28, Equatorial denied any intent to divest its stake in Copasa after seeking early termination of its June shareholder agreement with Minas Gerais.