November 24, 2017 / 4:32 PM / 9 months ago

Exclusive: Brazil to give up Eletrobras voting rights, keep veto

SAO PAULO (Reuters) - Brazil’s government has proposed giving up its voting rights in the privatization of power utility Centrais Elétricas Brasileiras SA (ELET6.SA) while retaining a strategic veto, an official told Reuters on Friday.

A view of the headquarters of Brazil's power company Eletrobras in downtown Rio de Janeiro August 20, 2014. REUTERS/Pilar Olivares

Electricity Secretary Fábio Lopes Alves said in a telephone interview that the federal government, which currently controls the company known as Eletrobras, would also retain the right to appoint the head of its board of directors.

The government has sent the draft of the proposal to the chief of staff’s office. It will be submitted to Congress “in the next few days,” Alves said.

Under the proposal, new investors would have more leeway to manage the company, he said.

“The government will retain a minority stake,” Alves said. “ ... Its remaining shares will be converted into a special class of stock, a golden share, which grants veto rights, some vetoes, but no voting rights.”

A limitation of voting rights at 10 percent of Eletrobras shares for the new investors is also part of the privatization plan, he said.

Beyond this, the government is proposing to curtail investors’ ability to make shareholder agreements that may give more power to certain investors than others, Alves said.

The privatization of Eletrobras was announced by the government in August.

Reporting by Luciano Costa; Writing by Ana Mano; Editing by Lisa Von Ahn

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