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Legal Update

Brazil: CVM Issues First Sanction Against Executive for Lack of Diligence in Corrupt Practices

25 September 2018
Tauil & Chequer Legal Update
On September 11, 2018, the Securities and Exchange Commission of Brazil (Comissão de Valores Mobiliários – “CVM”) concluded judgment of the first case involving violation of fiduciary duties of company administrators due to corrupt practices.

In a unanimous ruling, the CVM sanctioned a former executive of a publicly-held company to a five year disqualification from the exercise of administrative positions due to his alleged involvement in the dissimulation of undue payments made to foreign public officials. In 2016, the company entered into agreements with authorities in Brazil and the United States in which it admitted having participated in corrupt practices abroad.

The CVM panel concluded that the former executive took actions to deceive the company's internal controls and ensure the execution of illicit payments in violation of his duty to "use the powers conferred upon him by law and by the bylaws to achieve the corporate purposes and to support its best interests, as well as satisfying the requirements of the public good and the social role of the corporation ", pursuant to Article 154 of The Brazilian Corporations Law.

In the same judgment session, a former director of the company in question was acquitted due to lack of evidence for his involvement in the illicit acts. The sanctioned former executive can appeal the decision, referring to the National Financial System Appeal Council (Conselho de Recursos do Sistema Financeiro Nacional).

It is likely that the CVM will conduct similar sanctioning proceedings in the next months regarding other companies involved in corrupt practices. The ruling is indicative of the stance the CVM should take with regard to liability of directors and executives in the control and prevention of corporate corruption.


  • Carlos Motta
    T +55 11 2504 4210
  • Luís Inácio Lucena Adams
    T +55 61 3221 4321
  • Michel Sancovski
    T +55 11 2504 4672
  • Marjorie Havrenne
    T +55 11 2504 4260
  • Luiz Santiago Filho
    T +55 21 2127 4245
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