Bruna Maia Reporter  Mundial, a manufacturer of household utensils and beauty products, caused quite a stir on the BM&FBovespa recently. In early 2011, both the ordinary and preferred shares of Mundial were trading for less than R$ 0.30 (around US$ 0.19). By late July, the preferred shares peaked at R$ 5.11 (about US$ 3.32) and the ordinary shares reached R$ 7.01 (roughly US$ 4.55). The rise drew the attention of the Brazilian securities and exchange commission (CVM), which started looking into Mundial’s price oscillations. During the July 15 trading session alone, the company’s preferred shares rose 40%. Regardless of how the investigation turns out, the Mundial phenomenon illustrates a new trend: the BM&FBovespa’s special, governance-based listing tiers (Nível 1, Nível 2 and the Novo Mercado) are more than just access routes by which funds can be raised. They are setting the stage for companies to list anew.  The meteoric rise of Mundial came about after the company moved to Nível 1, the first step for companies that voluntarily commit to stricter corporate governance. The initiative was announced in early April and formalized by a meeting of shareholders in late May. A stock split was also approved at the occasion, dividing each share by six in an attempt to increase trading volume. In light of the market’s good reaction to the new listing, by late June the company had decided to go all the way — into the Novo Mercado, the most stringent segment on the São Paulo exchange. According to investor relations superintendent officer Michael Ceitlin, company personnel are working to complete the migration by the start of 2012.  All this movement served to pull Mundial out of stagnation. Publicly traded since 1966, but with little trading volume for years, the company is undertaking an initiative similar to those taken by Rossi, Cia. Hering, Portobello, and Cremer (respectively in the construction, apparel, ceramic tiling, and medical and hospital products industries), which all migrated to the Novo Mercado after many years in limbo. Most recently, the Forjas Taurus firearms manufacturer — another company with a low market capitalized — applied to the BM&FBovespa for listing on Nível 2. “They share the fact of having been listed for years, and having only now realized that corporate governance and liquidity are value adders”, says Jean Arakawa, a partner with the Mattos Filho law firm. The Technos wristwatch manufacturer is set to follow in their footsteps, having announced a stock distribution after having gone private in 2005; in a similar move, the Mahle Metal Leve auto parts company submitted a follow-on offering to the Brazilian securities and exchange commission (CVM) for analysis.  The most obvious reason for these companies to reform is image improvement. “Funding costs go down and it becomes easier to negotiate with potential creditors”, Ceitlin says. According to Antônio Morello, a partner with the Pinheiro Neto law firm, controllers that choose to comply with disclosure rules relinquish a part of their power. “Mandatory disclosure and closer contact with shareholders reduces the chances of a majority shareholder acting however he pleases, without being accountable to anyone”, he says.  Creating a way out for founding partners is an extra incentive when it comes time to professionalize company management and give minority shareholders greater influence. The Ultrapar holding company illustrates this scenario, having announced its relocation to the Novo Mercado this year, thereby facilitating the company’s succession process. “Company heirs have gained possibilities that would never be available under a culture of family control”, emphasizes Maria Cristina Cescon, a partner at Souza Cescon Barrieu & Flesch Advogados.  By deciding to head straight for the BM&FBovespa’s strictest tier, Mundial should expect a substantial amount of extra work. Nível 1 listings don’t address such touchy subjects as the conversion of all preferred shares into ordinary. “This is one of the most delicate processes in a reorganization; it involves diluting the ordinary shareholders and taking away the preferred shareholder’s benefits”, observes Adriana Pallis, a partner with the Machado Meyer law office. (Capital Aberto International Edition | Year 1 | # 4 | Oct - Dec 2011) (Notícia na Íntegra)