Do you think the pillars of Governance exist only for academic discussions and have no practical effect on how companies are run? If you answered yes to that question, then the latest news about the resignation of an independent board member at one of Brazil's largest companies may give you a reason to reconsider. When formal decision-making structures start to be bypassed, the problem is not merely administrative. It is an indicator that corporate governance is losing its essential function: creating legitimacy in a company's strategic choices. The resignation of an independent board member at a large company, after signaling concerns about "parallel deliberation forums" and "secret events," exposes that flaw with clarity.
The incident does not come down to personal issues or isolated conflicts. It reflects an organizational pattern: the migration of relevant topics to unstructured spaces, where documentation is scarce, participation is selective, and accountability becomes murky. All of that runs counter to the pillars of governance. When this occurs, confidence in the management process itself is eroded.
Why parallel forums are a symptom of governance erosion
Boards of directors exist to fulfill a function: to deliberate on materially relevant matters with transparency, documentation, and structured participation. When important decisions start to be worked out in parallel conversations, informal meetings, or private communications, three things happen simultaneously.
First, there is a loss of traceability. Without minutes or a formal record, it is impossible to identify who decided what and on the basis of which information. This makes both internal accountability and explanations to shareholders and regulatory bodies difficult. Second, there is a concentration of power. Not everyone has access to the same informal forums, which allows specific groups to gain disproportionate influence. Third, there is a fragmentation of realities: different board members operate with different information, in different contexts, generating uncoordinated decisions.
For publicly traded companies, where legitimacy is an implicit contract with the market, this is especially serious. Investors, analysts, and regulators need to trust that deliberations follow known and predictable processes.
The risk of selective investigations
A second warning sign mentioned is the asymmetric application of rules. When internal investigations, sanctions, or proceedings are triggered with unequal criteria, regardless of the nature of the facts, confidence in the compliance system itself collapses.
If one board member is removed for a certain conduct while a similar conduct by another member goes unnoticed or receives lighter treatment, the message is clear: the rules are not impersonal. They are tools. This compromises both the integrity of governance and the engagement of independent board members, who are often chosen precisely to represent interests broader than those of management.
The selective application of rules undermines confidence in the very governance those rules are meant to protect. This is the dynamic that leads capable professionals to question their continued presence on boards.
What changes when an independent board member resigns on principle
Resignations over governance issues are rare and costly. Board members normally tolerate significant discomfort rather than give up their position, prestige, or compensation. When one of them steps down precisely because the decision-making structure has deteriorated, it signals that the situation has crossed a threshold.
This creates ripple effects. Other companies in the sector take notice. Shareholders raise questions. Analysts reduce confidence in corporate risk estimates. Even regulators may be compelled to investigate. For a publicly traded company, especially one with a recent challenging track record, this amounts to a material cost: multiple compression, difficulty raising capital, and the withdrawal of institutional investors with strict ESG criteria.
How to restore legitimacy in deteriorated structures
Reformulating processes on paper is not enough. Restoring governance requires concrete and visible actions. These include: formalizing all relevant decision forums, recording them, and disclosing them to shareholders; reviewing ongoing investigations with public and consistent criteria; renewing board composition with professionals who have no prior ties to management; and submitting compliance reports to independent auditors.
The goal is not merely to comply with regulation. It is to rebuild the perception that decisions follow rational, documented processes that are applied equally. Without that, even formally correct structures lack legitimacy.
Scale: a problem at any company size
This dynamic is not exclusive to large publicly traded companies. Boards of privately held companies, startups with multiple partners, and even governance structures at foundations face similar risks: parallel discussions, criteria applied unevenly, lack of traceability. The difference is that in publicly traded companies the cost becomes public and the market responds immediately.
For decision makers at any scale, the lesson is clear: governance is not a set of boxes to check. It is a system of practices that only works if it is genuinely used. Formal forums only have value if deliberations actually take place there. Rules only sustain trust if they are applied impartially. When those conditions fail, even elaborate structures are emptied of meaning.
