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The controlling shareholders of Brazil’s Vale have agreed steps towards dissolving a long-standing shareholder agreement in a move the world’s biggest exporter of iron ore said would increase transparency.

The company said the controlling shareholder group, known as Valepar and dominated by Japan’s Mitsui, Brazilian pension funds, Brazilian private bank Bradesco and development bank BNDES, agreed to dissolve their partnership by 2020.

“As a result of the transaction, Vale will become a company with no defined controlling shareholder … making its management team more empowered and independent,” Vale said in an investor note.

Under the agreement, the controlling shareholders would merge Valepar into Vale, in the process converting their preferred shares into common shares.

Each preferred share would be worth 0.9342 common shares. The number of shares held by Valepar shareholders would increase by 10 per cent while other shareholders would see their holdings diluted by 3 per cent.

The controlling shareholders would agree to a new temporary three-year shareholders’ agreement when their present one expired in May.

By November 2020, the company would be converted into an open structure with all controlling shareholders holding common shares only on an individual basis rather than as a group.

The company would then be listed on the “Novo Mercado” segment of São Paulo’s BMFBovespa stock exchange, which aims to have higher standards of governance and transparency.

Copyright The Financial Times Limited 2017. All rights reserved.
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