How Universal Is the Corporate Form? Reflections on the Dwindling of Corporate Attributes in Brazil

MARIANA PARGENDLER*

The business corporation, a central pillar of modern capitalism, is deemed to have a set of defining features that are universal across different jurisdictions and ever more widely available. However, a close examination of legal developments in Brazil, one of the world’s largest economies, shows a surprisingly different picture. In the past decades, Brazil has significantly watered down the canonical elements of the corporate form, including limited liability and capital lock-in. After describing this phenomenon, the Article analyzes it in view of efficiency and distributional considerations. It puts forward the possibility that the blurring of the corporate attributes may be an adaptive response to a weak institutional environment, which, among other things, fails to protect minority investors and curb externalities through regulation. The Article concludes by examining how the erosion of the corporate attributes in Brazil subverts our conventional understanding about the evolution of corporate law and the immutability of the corporate form.

*Professor of Law, Fundação Getulio Vargas Law School in São Paulo (FGV DireitoSP);Stephen and Barbara Friedman Visiting Professor of Law, Columbia Law School; Global Professor of Law, New York University School of Law. I am grateful to Stephen Bainbridge, Donald Clarke, Martin Gelter, George Georgiev, Zohar Goshen, Henry Hansmann, Klaus Hopt, Yu-Hsin Lin, Curtis Milhaupt, John Morley, Juliana Pela, Bruno Salama, and participants in workshops at Columbia, FGV, and Penn law schools and in the IV Annual Meeting of the Ibero-American Institute for Law and Finance in São Paulo for their very helpful comments. All errors are my own.