The concept of corporate control, as outlined in Law No. 6.404 of 1976, Article 116 and paragraph 2 of Article 243, is derived from power and reflects the ability to influence or determine the conduct of others within an organizational context. In the legal sphere, control can take on various meanings: at times, it refers to the process of monitoring and verifying one’s own or others’ activities, with a view to preventing or correcting any deviations; at other times, it refers to the power of domination and direction, in accordance with the Anglo-Saxon meaning of “control,” as applied to the relationship between a parent company and a subsidiary. It is more common in Brazilian specialized literature to adopt the concept of control as political power and dominance over shareholder meetings, the election of the majority of directors, and the determination of the company’s direction, highlighting the personal nature of the power exercised by the controlling shareholder.
Corporate control power, far from being limited to mere formal authority, carries with it the legal function of overseeing and directing the company, binding the controlling shareholder to compliance with the company’s corporate purpose and social function. Pursuant to the sole paragraph of Article 116 of the Corporations Law, the controlling shareholder is responsible not only for conducting the company’s business and guiding its governing bodies, but also for acting in a manner that prevents and corrects its own conduct, supervising management and ensuring respect for the interests of the company, its minority shareholders, its employees, and the community in which it operates. This functionalist perspective on control highlights the assimilation of power by the law, conditioning it to duties of loyalty and legal responsibility, under penalty of holding the controlling shareholder liable for misuse of purpose or opportunistic use of their power and duties.
In the context of the stability of shareholding control, Brazilian corporate law distinguishes between stable and unstable forms of control, based on the predictability of the transfer of power. Majority control and control through legal mechanisms are considered stable, as their transfer depends on the will of the controlling shareholder, whereas minority control and administrative control (not provided for in Brazilian law) constitute unstable forms, susceptible to hostile takeovers or changes in the company’s ownership structure.
However, although it is a long-standing issue in corporate law, the classification of forms of control provided for in Brazilian corporate law raises some doubts given the regulatory complexity and organizational arrangements involving corporations.
Professor Eric Hilt1, commenting on the classic “The Modern Corporation and Private Property”2, states that the work begins with a surprising characterization of the business world of the 1930s (referring to the U.S. context): “Growing to enormous proportions, one might say that a ‘corporate system’ has evolved—just as a feudal system once existed.” Berle and Means argued that the emergence of this system fundamentally transformed the role of the corporation in society, and that these structures had become so large and influential that their behavior impacted “the life of the country and… of every individual.” However, their enormous scale meant that they were financed by the “wealth of countless individuals,” almost all of whom had become completely passive investors, with no role in their governance: ownership was separated from control. For Berle and Means, this meant that traditional concepts of society were no longer adequate. A new concept of the corporation was needed—one that would imply that the interests of the community should be incorporated into corporate conduct.
Based on this analysis, Berle and Means identified the well-known separation between control and ownership. But in identifying this phenomenon, they found that its intensity does not manifest to the same degree in all companies. This was the key to their development of a classification system for forms of control: ranging from forms that exhibit a greater degree of dissociation between ownership and control—such as managerial control—to forms where this dissociation is less pronounced, as illustrated by control through near-total ownership.
This line of thinking continues to influence us to this day, so we will now classify the forms of control provided for in Brazilian corporate law based on the classification scheme proposed by Berle and Means. Nor do we overlook the contribution made to Brazilian law by the work “The Power of Control in the Corporation”3 by Fábio Konder Comparato, with updates by Calixto Salomão Filho.
a) Majority Control
Majority control—in which the controlling shareholder holds more than fifty percent of the voting shares—according to the seminal analysis by Berle and Means, represents the initial stage in the historical separation between ownership and corporate control—a phenomenon that later proved to be the root of the well-known agency problems in corporate governance. In this arrangement, the power to conduct corporate business shifts from the minority to the majority shareholders, giving rise to the need for legal regulation that establishes duties of loyalty, accountability for controlling shareholders, and mechanisms for invalidating shareholder meeting resolutions.
This structure highlights the agency relationship between controlling and minority shareholders, in that the former, even though they do not hold the power to dispose of the company’s assets, retain control over the company’s activities, particularly due to the breadth of matters submitted for resolution by the general meeting, as provided for in Article 121 of Law No. 6.404 of 1976.
Within the context of Brazilian corporate law, it should be noted that the definition of a controlling shareholder, for the purposes of Article 116 of the Corporations Law, differs from that of a mere majority shareholder, since the sole or collective ownership of more than fifty percent of the voting capital is not an essential or sufficient requirement. Accordingly, the controlling shareholder must be understood as the holder of corporate rights that permanently ensure him or her a preponderant influence in corporate resolutions and the power to elect the majority of directors, regardless of whether he or she holds an absolute majority of the shares. This concept highlights that corporate control is rooted in the effectiveness of decision-making power and the ability to influence the company’s direction, rather than in the numerical ownership of shares.
Furthermore, an understanding of majority control must take into account the specific features of the legal mechanisms that structure power in a corporation, notably the adoption of common shares and shares with multiple voting rights, as well as the coexistence of common and preferred shares. These structures, while consolidating the controlling shareholder’s power, allow for a distinction between stable majority control and other forms of control, ensuring that power is exercised appropriately in accordance with the duties of loyalty and responsibility set forth in corporate law.
b) Control through Legal Mechanisms
Control through legal mechanisms proves to be a sophisticated tool for maintaining corporate control in large enterprises, allowing founding shareholders or entrepreneurs to exercise decisive influence without needing to hold a majority of the voting shares. This strategy is supported by corporate or contractual structures, which take the form, among other things, of establishing holding companies or entering into voting agreements, as provided for in Article 118 of Law 6.404/1976, giving rise to what is known as pyramidal or cascading control. This model of corporate organization finds its express legal basis in paragraph 2 of Article 243 of the Brazilian Corporations Law, which provides that a controlled company is one in which the parent company, directly or indirectly, holds corporate rights that ensure it, on a permanent basis, a preponderance in decision-making and the power to elect the majority of directors, thereby establishing itself as a mechanism for the concentration of decision-making power.
Furthermore, the adoption of a dual-class share structure constitutes another legal means of corporate control through statutory mechanisms, encompassing common shares with multiple voting rights and preferred shares without voting rights. The introduction of multiple voting into the Brazilian legal system through Law 14.195/21, which amended Articles 16 and 110-A of Law 6.404/76, grants holders of such shares the prerogative to exercise decision-making control disproportionate to their equity stake. Although recognized as a tool for preserving long-term strategies by founders, this innovation sparks debates regarding its effectiveness and the risk of a mismatch between the interests of insiders and those of outside shareholders, reflecting a classic dilemma in contemporary corporate governance regarding the protection of the corporation’s interests versus the exercise of personal control.
Finally, control through legal mechanisms also manifests itself when non-voting preferred shares are issued, representing an additional mechanism through which minority shareholders can exercise decision-making control, since the law permits the issuance of such shares up to a limit of fifty percent of the total issued shares. Thus, even without holding a majority of the share capital, certain shareholders can consolidate significant influence over corporate decisions, highlighting the complexity and sophistication of legally structured control within companies. Such legal instruments, while legitimate, require careful analysis regarding fiduciary duties and the mitigation of potential agency conflicts, reaffirming the central importance of striking a balance between management autonomy and the protection of the collective interests of the corporation and minority shareholders.
c) Minority Control
Minority control in the Brazilian corporate context has been the subject of doctrinal analysis, especially in light of the dispersion of share ownership observed in recent decades. Beginning in the second half of the 2000s, the stock market witnessed, after thirty years, the first attempt at a hostile takeover. During that period, companies had been negotiating corporate control and incorporating takeover defenses into their articles of incorporation, highlighting changes in corporate governance. At the same time, the merger of Bovespa with BM&F (now B3), helped boost the capital markets and reinforced the trend toward widespread share ownership, sparking debates about the possibility of aligning Brazilian managerial control (a problematic issue in Brazil, as will be seen) with international models, particularly the U.S. model.
Brazilian legal scholarship has questioned the application of Berle and Means’ classification to the local context, emphasizing the need for permanence and autonomy to establish controlling power—attributes that minority control allegedly lacks. Some argue that, while majority control entails specific duties, minority control is not subject to the same obligations, as it lacks the consistency and independence required to manage the corporation autonomously, as provided for in Article 116 of Law 6.404/1976.
Fábio Konder Comparato and Calixto Salomão Filho argue that the Corporations Law implicitly recognizes minority control, provided that the legal rules governing the convening and operation of the general meeting are observed. They conclude by stating that “theoretically, therefore, a single shareholder holding a single share can constitute the general meeting.”4 The exception applies to the matters set forth in the subparagraphs of Article 136 of Law 6.404/1976, which require the approval of shareholders representing at least half of the total votes, unless a higher quorum is required by the bylaws of a company whose shares are not listed on a stock exchange or traded on the over-the-counter market.5
However, we understand that minority control is provided for in the Brazilian Corporations Law in light of its practical application, as Berle and Means argue, and manifests itself when no other block of shares has sufficient strength to form a core capable of securing a majority of votes, suggesting that, in Brazil, even a minority shareholder could decisively influence the company’s operations through corporate resolutions.
d) Administrative control
Administrative control is characterized by a highly dispersed shareholding structure, a situation in which no single individual or small group holds a sufficient stake to dominate the shareholders’ meeting on its own. When the largest single stake represents a negligible fraction—such as 1% of the capital—no shareholder possesses sufficient power to decisively influence management or to secure a majority of votes capable of exercising effective control. This phenomenon represents the pinnacle of the separation between ownership and control described by Berle and Means, and later identified by Jensen and Meckling6, beginning in the 1970s, as the genesis of agency problems, which arise from the divergence between the interests of owners and the behavior of managers.
The specialized literature devotes considerable attention to the costs arising from the separation of ownership and control, as well as to policies capable of mitigating them. Adam Smith had already pointed out that, in this scenario, managers would lack natural incentives to run the business efficiently, unlike owner-managers. Jensen and Meckling consolidated this insight by characterizing the shareholder-manager relationship as an agency problem, in which shareholders assume the role of principals and managers that of agents, who maximize personal utility. The agency theory analysis identifies monitoring costs, agency costs, and residual losses resulting from deviations in behavior, even in the presence of incentive mechanisms, constituting the first structured approach to understanding the separation of ownership and control.
In addition to the direct relationship between shareholders and managers, modern literature recognizes the role of other actors capable of monitoring and constraining agents, such as debenture holders, lawyers, regulatory bodies like the CVM, and market participants, including potential purchasers of securities. Under Brazilian law, administrative control is not expressly provided for, since Article 116 of the Corporations Law defines the controlling party based on shareholding status. Agency problems of this kind are, therefore, in Brazil, specifically regulated by Section IV of Law 6.404/1976, with particular emphasis on the duty of loyalty imposed on managers by Article 155, which guides their conduct in accordance with the company’s interests.
e) External Control
External control is generally characterized by the exercise of influence over the company through means other than voting rights. In certain situations, the external controller may also be a shareholder, but their power is not exercised through voting; rather, it is exercised through external instruments, such as contractual clauses, conditions arising from corporate indebtedness, or government intervention in the economy. As Comparato and Salomão Filho point out, “[t]here is, thus, first and foremost, a whole series of scenarios in which external control results from the company’s indebtedness.”7
However, just as in the case of administrative control, the legal definition of a controlling shareholder set forth in Article 116 of Law 6.404/1976 does not cover this form of control. Consequently, the fiduciary duties set forth in the sole paragraph of that provision—which apply to the controlling shareholder—do not apply to the external controller.
Nevertheless, the external controller is subject to the general rules of civil liability, particularly those that impose a duty to compensate for damages on anyone who, through a wrongful act or omission, pursuant to Articles 186 and 187 of the Civil Code, or by engaging in a risky activity as defined in the sole paragraph of Article 927 of the same Code, causes harm to another.
In conclusion, we emphasize that the phenomenon of corporate control in corporations is complex and poses a challenge to legal scholars in that the controlling shareholder, as a governance agent, directly or indirectly manages the company’s business, influencing and sometimes determining the organization’s operations, and must comply with legal and ethical standards. For a more in-depth exploration of this debate, we recommend reading our article “Duties of Loyalty of the Controlling Shareholder.”8
- HILT, Eric. The Berle and means corporation in historical perspective. Seattle UL Rev., 2018, 42: 417.
- BERLE, Adolf A.; MEANS, Gardiner C. The modern corporation and private property. Rev. ed. New York: Harcourt, Brace & World, Inc., 1967. (Original publicado em 1932).
- COMPARATO, Fábio Konder et al. O Poder de Controle na Sociedade Anônima. 6. ed. Rio de Janeiro: Forense, 2005.
- COMPARATO, Fábio Konder et al. O Poder de Controle na Sociedade Anônima. 6. ed. Rio de Janeiro: Forense, 2005.
- Ibid.
- JENSEN, Michael C.; MECKLING, William H. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. In: CORPORATE Governance: Values, Ethics and Leadership. London: Gower, 2019. p. 77-132. ISBN 9781315191157.
- COMPARATO, Fábio Konder et al. O Poder de Controle na Sociedade Anônima. 6. ed. Rio de Janeiro: Forense, 2005.
- OLIVEIRA, F. de S. Deveres de lealdade do controlador. Revista Jurídica da UFERSA, [S. l.], v. 9, n. 17, p. 272–322, 2025. DOI: 10.21708/issn2526-9488.v9.n17.p272-322.2025. Available here. Accessed Aug. 12, 2025.