Second Chances in the Boardroom: Reputation, Pardons and the Limits of Perpetual Punishment

In June 2025, JBS, one of the world’s largest food companies, listed its shares on the New York Stock Exchange. Among its directors sit controlling shareholders who left the board in 2017 under a plea agreement in Brazil’s anti-corruption investigations and returned in 2024, after acquittal by the Brazilian securities regulator (CVM). The episode raises, at scale, a question most governance codes leave unanswered: when may a person convicted of misconduct, and later pardoned or acquitted, return to the board of a listed company?

Brazil offers something close to a natural experiment. Its Corporations Act requires directors of listed companies to have an “unblemished reputation” (reputação ilibada), an indeterminate legal concept assessed by shareholders under regulatory scrutiny. And its anti-corruption wave produced an entire cohort of convicted, leniency-bound or pardoned executives now seeking reintegration. The outcomes diverge instructively: reintegration with reinforced governance at JBS; a fifteen-year regulator-imposed disqualification for former Petrobras officers; and, elsewhere, a negotiated permanent exit through private agreements.

Two errors dominate the debate. The first treats clemency as a reset. It is not: as Brazil’s Superior Court of Justice consolidated in Precedent 631, a pardon extinguishes the punishment, not the conviction or its secondary effects. The facts remain, so does the market’s memory. An acquittal or pardon reopens the door, it does not certify fitness.

The second error treats a permanent ban as the prudent default. It is not, for three reasons. Legally, reputation-based exclusions that operate as perpetual punishments sit uneasily with constitutional prohibitions of perpetual penalties, and legislators everywhere have bounded even regulator-imposed disqualifications: twenty years in Brazil, two to fifteen under the UK Company Directors Disqualification Act, defined look-back periods and waivers under the US bad actor rules. It would be incoherent for an open-ended reputational judgment to outlast the harshest sanction a regulator may lawfully impose. Economically, the managerial labor market continuously reprices reputation on observed conduct; a legal barrier frozen in time contradicts the very mechanism the requirement is meant to serve. And practically, perpetual exclusion deprives companies of experienced leadership that governance structures could safely reintegrate.

Between amnesia and banishment lies a process. Drawing on the CVM’s precedents, we propose five factors that turn an impressionistic judgment into a defensible board decision. First, pertinence: crimes touching the trust inherent in managing other people’s money (corruption, market abuse, fraud) weigh far more than offenses unrelated to the role. Second, time: the more distant the facts and the sanction, the weaker their disqualifying force. Third, subsequent conduct: demonstrated resocialization, cooperation with authorities, and a clean record since. Fourth, safeguards: majority-independent boards, empowered audit committees and monitored integrity programs are objective mitigants that convert an unacceptable risk into a manageable one, and function as a less restrictive alternative to exclusion under any proportionality test. Fifth, transparency: full disclosure to shareholders and a documented, reasoned decision, capable of withstanding scrutiny from proxy advisors, regulators and courts.

The burden of proof matters too. Reputation should be presumed, with the blemish demonstrated by whoever alleges it on established facts, not press clippings or pending inquiries; the presumption of innocence increasingly applies beyond criminal law, as Brazil’s Supreme Court has recognized.

None of this is Brazilian exotica. Post-DPA (Deferred Prosecution Agreement) executives in the United States and the United Kingdom, post-leniency executives across Latin America and founders returning after misconduct findings pose the same question to nomination committees everywhere. The Brazilian experience, precisely because it ran the experiment first and at scale, shows that the answer is neither never nor always, but a structured, time-sensitive, safeguard-conditioned judgment. Boards that master it will neither waste leadership the market has repriced nor gamble their credibility on an unexamined return.

* This post draws on the authors’ academic article “Unblemished reputation, pardon and the right to a second chance: the (in)eligibility of a convicted person to manage corporations” (available from the authors).

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Clicia Souza is a partner at Giamundo Advogados.

Christian Fernandes Rosa is a partner at Giamundo Advogados.

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