Implementation of Administrative Process Theory in the Consultation Process within the Brazilian Securities and Exchange Commission (CVM): Analysis of the CVM’s Decision on the Juridical Nature of the Merger of Shares

Abstract

Purpose ”“ The purpose of this article is to investigate whether the Brazilian Securities and Exchange Commission (CVM), in ruling on the legal nature of the merger of shares, observed the elements of the administrative procedure, described in the administrative process theory of regulation developed by Steven Croley. More precisely, it was analyzed the decision-making process that culminated in the publication of Relatório RA / CVM / SEP / GEA-3 / Nº 21/14 and Parecer N^o 2014 / GJU-2 / PFE-CVM / PGF / AG ”“ which addressed the legal nature of the merger of shares ”“, in order to identify which elements of the administrative procedure are present in the decision of the CVM.

Methodology ”“ First, the bases of the administrative process theory will be described, notably the elements of the administrative procedure indicated by Steven Croley as essential for a socially satisfactory regulation. After that, it will be analyzed how happened the decision process that culminated in the publication of Relatório RA / CVM / SEP / GEA-3 / Nº 21/14 and Parecer No 2014 / GJU-2 / PFE-CVM / PGF / AG. Next, a critical analysis of the CVM decision will be presented, from the perspective of the administrative process theory.

Findings ”“ At the end of the analysis it was shown that some of the assumptions of the administrative process theory were not duly respected by the CVM when issuing Relatório RA / CVM / SEP / GEA-3 / Nº 21/14 and Parecer N^o 2014 / GJU-2 / PFE-CVM / PGF / AG, which may raise questions about the reliability and legal acceptance of the decision issued by the regulatory authority.