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Code of Ethic and Corporate Conduct


Nature: this document is a Code of Ethics and Business Conduct, inspired by ethical principles and the objectives described below.

Objectives: establish the expected behavior pattern of CESP professionals and formalize their commitment to the values and principles of the Company, in order to guide the decisions that have ethical implications and may eventually affect the Company’s reputation.

It also establishes how to manage conflict; emphasize the importance and need for continuous cultural improvement and professional of all involved; encourage constructive relationship with other entities, suppliers, customers, creditors, investors, authorities and communities, and with their own managers, directors, fiscal council members and employees, raising the level of confidence in the internal and external relations; preserving the image and reputation of the Company always associated with essential values for a high level of relationship.

Coverage: The Code is inspired by the principle that the Ethics permeates the hierarchy and fixed reciprocal and not unilateral obligations, applying therefore, as leaders and followers and to all employees of the CESP, be they managers, directors, fiscal council members or employees.

This Code also applies to suppliers and business partners who will learn of its content at the time of hiring and shall undertake to ensure that the actions of its employees are aligned to the principles and values of the CESP.

Structure: the Code provides an indication of the standards that emphasize obligations to do or not do, but will always have as a reference moral values. The rules of disciplinary nature will be handled in appropriate regulations.

The Code’s basic structure is composed of:



The Code was drafted based on the following principles and values embedded in the Company´s culture:

Integrity is the respect for the concepts of honesty and morality, and for ensuring that we have to follow the laws of the country, as citizens and as professionals, as well as the internal rules that govern the activities of our Company.

According to the concept of corporate governance, organizations are transparent when they meet the criteria of relevance, disclosing information, whether required or not by laws or regulations, which is of interest to their stakeholders.

The Company encourages and practices Solidarity, which is the highest level of human relationships with the common good as the ultimate goal.

The Company recognizes that its success will depend on the level of satisfaction of its clients and the level of motivation of its people.

In line with the principle of sustainability, the Company should be permanently committed to protecting the environment and help the society create a culture of preservation and respect for it.

Managers, directors, fiscal council members, employees, suppliers and partners must be committed to the Company’s objectives, taking into account its economic entity nature.

Constructive internal and external relationships are both important, given the importance of their role in society and especially in the community in which it operates.

From the standpoint of Ethics, power-authority gave way to power-responsibility.
According to this vision, leaders are responsible for the success of their subordinates, whether at home, school, government, in other kinds of organizations and, especially, in companies.

The Company claims to be vehemently opposed to acts or practices corroborating with fraud and corruption.
From these principles and values, standards of conduct are set apply to all our managers, directors, fiscal council members, employees, suppliers and partners.


a) Respect for the laws of the country and the internal rules of our company, among which includes this Code are mandatory and failure to comply could have serious consequences for those involved and for the Company. Managers, directors, fiscal council members, employees, suppliers and partners who violate this Code are subject to disciplinary action, subject to referral to the competent authorities any cases involving criminal conduct.

b) Any acts or transactions involving the Company are done in total compliance with the legislation in effect in the locations where they should produce effect.

c) In case of conflicts of interest of any kind, the option that fulfills the interests of the Company shall prevail.

d) The above hypothesis includes offering or receiving benefits of any kind that may represent an attempt to obtain or grant favor to third parties that are interested in maintaining a business relationship with us.

e) It is prohibited to accept or give gifts, benefits or third party advantage offered or received due to their position or function, except gifts of no commercial value or which, being distributed as a courtesy, propaganda, habitual disclosure or during special events or campaigns, value up to eight (8) times of Fiscal Unit of São Paulo State (UFESP).

f) Property, equipment, electronic systems, information technology resources and the Company’s facilities are designed exclusively for use in their activities and cannot be used for private purposes, except in standardized situations, defined by the Company, and limits on them.

g) We must also understand as Integrity the effort of all managers, directors, fiscal council members, suppliers and partners, so that the company is publicly recognized for its principles and values.

h) We must combat all forms of discrimination or prejudice on account of race, politics, sex, creed, national origin, sexual orientation, social class, age, disability or physical condition or any other reason, as well as the practice in any form, sexual exploitation of women, men, children and adolescents.

i) We must reject oppressive practices of coercion to forced or compulsory labor and abuse of power, in the form of moral or sexual harassment, as we should not allow situations that constitute disrespect, intimidation, coercion or threat in order to obtain sexual advantage or favor or, improper conduct that could damage the personality, dignity or physical or psychological integrity of a person, endangering their employment or degrade the work environment, whichever is the agent of their status as superior, inherent the exercise of his office or function.

j) It is up to anyone communicate attitudes or actions of which they may become aware and that infringes or may infringe rules in this Code, or prejudicial to the good working environment.

k) The Company’s intellectual property, such as trademarks, patents and proprietary processes, among other cases, should be protected and the same principle should be applied to the intellectual property of other organizations with which we have business relationships.

a) It is the duty of the Company to ensure transparency of its activities and be fully committed to ethics and sustainable development, ensuring, based on these principles, the best results to shareholders, employees and partners.

b) Plans, facts or decisions of the Company that are of interest to internal or external audiences, except in the case of justified secrecy shall be subject to full disclosure as a means of encouraging participation and contribution of all stakeholders.

c) The previous principle applies to information on aspects of our business that has been the subject of comments in the press.

d) The information should be made available in the shortest possible time and by physical means and/or available technology in order to reach all recipients safely and without favoritism.

e) The information we have about our customers, managers, directors, fiscal council members, employees, suppliers and partners are confidential and may only be transferred to third parties with the express authorization of those involved, except in cases provided by law.

a) The preservation, maintenance and affirmation of the Company’s image and reputation is the duty of everyone who in any way contribute and participate in this result, and therefore all directly and indirectly, jointly and severally responsible for the success of the enterprise.

b) The spirit of competence must prevail over that of competition in all our activities.

c) The exchange of ideas and experiences between colleagues with entirely free and independent of rank is a manifestation of solidarity from which everyone can benefit.

d) The effective participation in teams should be especially valued for its effectiveness in promoting integration and exchange of knowledge among people and greater spirit of cooperation between them.

e) The personal and professional relationships should always be marked by the spirit of cordiality and cooperation.

f) The victories and individual and professional achievements, although seemingly small, should be celebrated as a stimulus to continued efforts.

g) We consider diversity as a highly constructive factor and, therefore, cannot live with any kind of discrimination or prejudice.

h) We must think of solidarity as well as a duty of the Company and each of us in the face of the communities where we work. That duty has gained in importance in situations of hardship and suffering can be mitigated by our performance.

i) Educational campaigns should have our support, primarily to benefit the communities where we operate.

a) It is up to the Company to create conducive environment for the development of social and community work of all its managers, directors, fiscal council members, employees, suppliers and partners, taking responsibility for providing it in a satisfactory conditions.

b) The participation of our management and employees in professional bodies and political party activities, sports, religious or any other nature, is seen as part of citizenship and will not be subject to any restriction, provided they do not interfere with their professional activities.

c) Reviews or suggestions aimed at improving work processes or relationships in and out of that environment, will always be welcomed and considered as relevant service of its author.

d) Internal and external relations should be guided by the spirit of self-esteem and respect for the dignity of our interlocutor, even in situations where there are conflicts of opinions or interests.

e) It is up to the Company and its managers, directors, fiscal council members, employees, suppliers and partners in all individually accepted forms, to seek a balance between work life and personal life, aiming at enhanced levels of performance and commitment.

a) It is our duty to respect the laws protecting the environment, preventing any damage that may be caused by pollution, the formation of waste and the waste of natural resources.

b) We must contribute to the formation of a culture of respect for the environment, through our personal, business or professional activity, to develop and/or participate in activities and programs that aim at the legitimate preservation of natural resources.

c) It is the duty of everyone, at any hierarchical level, to warn of the existence of facts or events that may generate environmental risks, and the Company shall register and assess such risks and establish how to prevent them.

d) CESP maintains no business relationship with companies that practice activities harmful to the environment, explaining, in our procurement processes, the need for strict compliance with environmental legislation and preservation procedures required by the Company.

a) It is the duty of all managers, directors, fiscal council members, employees, suppliers and partners know and practice all Company standards and contribute to the improvement of its financial results, which are indispensable for its sustainability as an economic entity.

b) We should carry out professional activities with competence and diligence, always working for the technical improvement and the constant updating in line with the strategic objectives of the Company.

c) The Company’s reputation and image are its greatest assets and therefore we must be ethical and judicious in our operations, both in the workplace and outside, always acting in accordance with the principles and values of the CESP.

d) We shall not take any personal advantage of business opportunities that arise in the workplace and are clearly identified with the interests of the Company.

e) We must not disclose confidential information about the Company or other companies with which we do business, before it is publicly disclosed to investors in general. And we must not use inside information for our own benefit or that of third parties.

f) It is the duty of all, managers, directors, fiscal council members, 20 employees, suppliers and partners, prevent, deter or denounce situations that characterize conflict of interest, as the practice of acts in order to benefit private interests in opposition to the interests of the Company or can cause it damage or loss.

g) To the extent of our responsibilities, we must cooperate with the supervisory bodies and internal and external control, giving them promptly the information that we have.

h) As a general rule, our working relationship is on an exclusive basis, the hierarchical shall be aware of exceptions.


a) We must take care that all commitments to our customers to be faithfully respected, without favoritism arising from any other relationship other than the commercial.

b) The information to be provided to customers must strive for correctness, clarity and timeliness.

c) We must be attentive in cases of complaints and claims, even though they appear to be unfounded.

d) The customer information must be for the exclusive use of our Company, except as provided in item 2, paragraph “e”, of this Code.

e) We can exercise the right to terminate business relationships with customers for whom we have reliable information of practices contrary to our standards of moral, commercial or environmental conduct.

a) The choice of our suppliers must be made on concrete bases and neutral, without favor and according to the law. The selection of our suppliers should be based on concrete and neutral factors, without favoritism and according to the law.

b) The supplier relationships can give rise to some forms of conflicts of interest, which must be promptly resolved by the principles of justice and equity.

c) We must keep with our suppliers of products and services for ongoing and open dialogue, so that they can know the culture of our organization, particularly with regard to our environmental responsibility.

d) Receiving and offering gifts (institutional propaganda) is admitted from our suppliers to the limit 8 (eight) UFESP but not receiving or offering gifts that can embed an expectation of return, according to item 1, paragraph “e” of this Code. In case of doubt, the supervisor or the Ethics and Business Conduct Committee should be consulted.

e) In supplier contracting processes the requirement of compliance with existing laws should be made explicit, including those relating to anti-corruption, the environment and decent work, rejecting any form of child or forced labor.

f) The results of negotiations with suppliers must include objectives and precise agreements for the avoidance of doubt of interpretation.

g) Our managers, directors, fiscal council members, employees, suppliers and partners must inform the superior bond of the existence of technical, commercial, economic, financial or labor, abstaining from participating in any bidding, negotiation and management of agreements with companies involved.

a) We should strictly abide by all the commitments that the laws impose on us in order to avoid conflicts with the authorities in charge of its implementation.

b) Our relations with authorities are maintained in an atmosphere of respect and independence.

c) Our dialogue with authorities should be conducted by specially authorized personnel for this function.

d) Any attempts to influence decisions of the authorities by reprehensible means, or by offering gifts, travel, favors, benefits or any kind of advantage are not acceptable. Our greatest defense argument will always demonstrate the correctness with which we act in any application hypothesis of the law.

e) In terms of political or partisan activities, none of our managers, directors, fiscal council members, employees, suppliers and partners shall speak on behalf of the Company.

7.4. MEDIA
a) We recognize the importance of the work that media professionals develop for the benefit of enlightenment to the people and defending the common good.

b) We must maintain open and continuous dialogue with the press, but always and exclusively through persons authorized for this purpose and supported by correct and verified information, even when they involve third parties.

c) We must expose the version of the company about facts that may be publicly disclosed and that directly or indirectly affect our reputation and image, or the legitimate interests of our shareholders.

d) We should be very careful with the disclosure when the information involved third parties or who have come to our attention in secrecy, as a result of business relationships.

a) We should have transparency and accountability in the management of the Company and can devote all knowledge to add value so that our shareholders have in a long-term vision, a fair return for their capital.

b) Good corporate governance practices should be continuously applied in our Company, because they contribute directly to the improvement of our performance.

c) All information, whether mandatory or not, that are of interest to our shareholders for the proper evaluation of the performance and prospects of our Company shall be communicated by the fastest available means and without favoritism.

d) The interests of minority shareholders should be protected by the principle of equity, both in relation to the distribution of results on the disclosure of relevant information.

e) We must keep watch on the risks to which the Company is subject, be they market, political, financial, environmental, regulatory or operational, in order to ward off a fast and efficient way, those that may compromise results for shareholders.

a) The Company recognizes that unions are legitimate representatives of the employees in filing claims and conducting negotiations aimed at topics regarding the labor relations.

b) Relations between the Company and unions must be conducted in climate of mutual respect and seek a balance between the interests of the parties involved, as the Company itself, its shareholders, employees and society in general.

c) The Company prioritizes the path of negotiations in their labor relations.

d) The Company, as a whole, represented by the group of managers and supervisors, and advised by Human Resources, is responsible for labor relations and trade unions.

e) The Company will not create obstacles to the free association of its employees to unions, but of them will require the fulfillment of obligations under the employment contract, except in cases provided by law.


a) Leaders must use their power for the benefit of the success of subordinates.

b) Leaders must keep their subordinates permanently informed about the Company’s plans, both in the economic as in environmental, to enable greater motivation and contribution.

c) The teamwork should always be encouraged and valued for their contribution to a greater cooperation environment.

d) New ideas, criticisms and suggestions of subordinates must be accepted and encouraged as contributing to the practice of innovation.

e) Victories and achievements of subordinates, although seemingly small, should be celebrated as encouraging their continuation.

f) The merit should always be the most important factor in our admissions, promotions and remuneration policy.

g) Leaders must not forget that their example is worth more than many words.

h) It is up to administrators and the management team to ensure that internal records are reliable and mirror faithfully and accurately, all committed transactions and the financial position of the Company.

i) In case of violation of internal rules, the first attitude will always be room for dialogue that favors the clarification and correction, since it clear that there is good faith.

j) When the application of penalties is unavoidable, for violation of law or any internal rule, including those contained in this Code shall be observed specific standard and communication, be avoided any form of offense or embarrassment, punishment must be fair, reasonable and proportional to the offense committed. In any case, respect for the individual should be the guiding element of conduct for leaders.

a) It is the duty of all managers, directors, fiscal council members, employees, suppliers and partners work against corruption in all its forms, including extortion and bribery.

b) We must fight and denounce acts and procedures aimed at concealing or disguising the illicit origin of assets, rights and amounts resulting from fraud or malicious acts.

c) We must take a proactive stance in adopting the values and principles of ethics and integrity in our business, totally rejecting the practice of illegal or unlawful acts or corruption.

d) We should not plead, solicit, induce, suggest, receive or offer any kind of financial help, bonus, premium, commission, donation or advantage of any kind for ourselves, family members or anyone, for the fulfillment of our business activities or to influence others for the same purpose.

e) We acknowledge and encourage the Company’s formal commitment to combat all forms of corruption and fraud.

Managers, directors, fiscal council members, employees, suppliers and partners are forbidden, and under the law, practices that go against the national heritage or foreign, against the principles of public administration and also the following:

a) Promise, offer or give, directly or indirectly, undue advantage to a public servant or a third person related to him;

b) Finance, pay for, sponsor or otherwise subsidize the practice of illicit acts;

c) Use of interposed individual or legal entity to conceal or disguise real identity of interests or benefits of acts performed;

d) Hinder investigation or supervision activity of bodies, entities or public officials, or intervene in its operation, including within the framework of regulatory agencies and the national financial system oversight bodies.

It is forbidden:

a) To frustrate or defraud, by adjustments, mixed or other expedient, the competitive nature of bidding.

b) To prevent, hinder or defraud the performance of any bidding act.

c) Remove or seek to move bidders, by fraud or advantage of any kind offering.

d) Defraud bid or contract arising therefrom.

e) Create, fraudulently or irregularly, a legal entity to participate in bidding or enter into a contract.

f) Get advantage or undue benefit, fraudulently, modifications or extensions of contracts without authorization by law, act in the invitation to bidding or in the respective contracts.

g) Manipulate or defraud the economic and financial balance of contracts.


The management of this Code will be up to the Ethics and Business Conduct Committee appointed by the Company’s President. The operation of this Committee will be done in accordance with its regulations.

Adopting compliance practices, or ensuring compliance with values, principles and standards present on the company culture, and ensure the compliance with legal and regulatory rules, they are encouraged representations of referrals of possible situations of corruption, conflict of interest or of breach of this Code. Representations should be addressed to the Coordinator of the Ethics and Business Conduct Committee The referral may be made on the Company’s website in the area Code of Conduct at the e-mail, assuring the secrecy of the representative, pursuant to item 17 of the Internal Code.


The present Business Ethics and Conduct Code is integrated with the Company’s Internal standards and will be of mandatory compliance. For this reason, the delivery of the Code should be done to all employees and it is the responsibility of Human Resources and Information Technology to establish distribution and receipt control procedures. Permanently, the Human Resources department should take steps/releases and periodic refresher courses to reiterate the need for compliance with this Code.

This Code of Conduct should be widely publicized by the media of the Company to all its managers, directors, fiscal council members, employees, suppliers and partners.

Reviewed in the board of directors’ meeting held on June 09, 2015.

Dividend Policy

1. CESP’s Management adopts the policy of quarterly appreciating (i) the results of Quarterly Information – ITRs, (ii) the projection of results of the year in progress, (iii) projected future cash flow and, whenever the financial situation allows, anticipate dividends as interest on equity pursuant to the by-laws and the Brazilian legislation

2. Both the payment of dividends and the payment of interest on equity will observe the statutory priority attributed to Class A Preferential Shares – PNAs.

3. Pursuant to the by-laws, the fiscal year will coincide with the calendar year, at the end of which the Company will prepare the annual accounting statements. Brazilian Corporate Law and the Company’s by-laws require the holding of an Annual Shareholders’ Meeting until April 30 of each year, in which, among other matters, the shareholders shall decide on the Board of Directors’ proposal of distribution of annual dividends related to the previous year. All the shareholders registered as such on the base date of the declaration of dividends are entitled to receive dividends, distributed pursuant to the by-laws.

4. For the purposes of Brazilian Corporate Law, net income is defined as the result of the year that remains after deducting the accumulated losses from previous fiscal years, the amounts related to income tax and social contribution, any amounts allocated to profit sharing to employees and managers, which are not foreseen in the case of CESP. Before any other allocation, five percent (5%) of net income shall be deducted to the formation of the legal reserve, until the limit of twenty percent (20%) of the capital stock.
5. Also pursuant to the law, the Board of Directors’ proposal of allocation of the results to the shareholders will comprise adjusted net income, after deducting the portions necessary to the formation of the reserves permitted by law and adding realization of the income reserve, if any.
6. The result distribution will be made in compliance with the by-laws.
Approved by the Board of Directors on 06/07/2011

Additional Information to the Dividend Policy

Shareholding Composition

The Capital CESP, is as follows:

Shares Quantity Capital(R$ thousand) Participation
Ordinary (ON) 109,167,751 R$ 1,991,814 33.3%
Preferential(PNA) 7,399,122 R$ 135,000 2.3%
Preferential (PNB) 210,935,800 R$ 3,848,619 64.4%
TOTAL 327,502,673 R$ 5,975,433 100.0%

Rules on the distribution of dividends

The Company’s Articles of Association, in article 31, establishes that the profit in the financial year, after the deductions forecasted by law, shall have the following destination:

  • application of 5% (five per cent), before any other destination, to the constitution of the legal reserve, up to the limit of 20% (twenty per cent) of the share capital;
  • from the balance, an amount will be destined for the payment of the priority annual dividend to the class A Preferential shares of 10% (ten per cent), calculated over the amount of the paid-up share capital represented by class A Preferential shares, to be equally prorated between the same;
  • from the balance, an amount will be destined to the payment of the mandatory annual dividend to the Ordinary shares and to the class B Preferential shares corresponding to 10% (ten per cent) of the amount of the paid-up share capital represented by these shares, to be equally prorated between them;
  • from the balance, up to 20% (twenty per cent) the Company may allocate as deliberated by the General Assembly, for reinvestment to expand the activities of its corporate object, up to the limit of 10% (ten per cent) of its share capital;
  • the balance shall have the destination deliberated by the General Assembly, in compliance with the retentions allowed by law, and, in the case of a distribution of the remaining balance to the Ordinary and class A Preferential and class B Preferential shares, this later shall be done under equal conditions.

The payment of interest as remuneration of its own capital may be deduced from the amount of payable dividends, as established in the legislation in force.

The Articles of Association also establish in article 32 that:

  • The Ordinary shares will have the right to a mandatory minimum dividend corresponding to 25% (twenty-five per cent) of the net profit in the exercise, after the deductions established or allowed by law;
  • The class B Preferential shares will have the right to take part under equal conditions with the Ordinary shares in the distribution of the mandatory dividend according to the terms of the caput of the current Article.
  • The mandatory dividend may be paid by the Company in the form of interest over its own capital.

Constitution of Unrealized Profit Reserves

In the 2009 exercise, the net profit of R$ 762.7 million was strongly influenced by the positive financial result with revenues from currency exchange variations, in the amount of R$ 665 million. Out of that profit, a portion of R$ 579.9 million refers to financially unrealized currency exchange variations, due to the existence of long-term liabilities. The acknowledgment of that revenue did not imply a cash admittance and constituted an unrealized result. The realization shall effectively occur only upon the payment of the portions of the principal of loans and funding operations.

Therefore, based on CVM’S Opinion nº 13/1987 and on the CVM/SNC/SEP Circular nº 1/2006, and on item II, of article 197 of Law nº 6.404/76, the constitution of an unrealized profit reserve was proposed in the total amount of R$ 579.9 million, related to the portions of currency exchange variations that shall be realized between 2011 and 2019.
Composition of the unrealized portions:

Amounts in R$ Thousand

Exercises 2016 2017 2018 2019 Total
Unrealized Portions: 31,097 34,593 38,482 35,442 139,614

Thus, based on the opinion of CVM Guideline No. 13/1987 and the CVM / SNC / SEP No. 1/2006, and item II of Article 197 of Law 6,404 / 76, proposed to profit reserve of the realize the amount of R $ 579.9 million related to the parts of exchange rate changes that will take place between 2016 to 2019.

Such reserve, if not absorbed by losses, will be realized according to the schedule above, in the amount of the portions for every realization year, which shall become a part of the dividend base of the result destination proposals presented to the shareholders, in the respective financial years, in conformity with item III, of article 202 of Law nº 6.404/76.

Periodicity of the distribution of dividends

The Company, according to article 31 of its Articles of Association, distributes dividends based on the profit in the financial year. The Articles of Association also establish, in article 32 fourth paragraph, that the Company may elaborate intermediary or intercalary balance sheets for the purposes of dividend distribution or payment of interest over its own capital. The Management Board may deliberate on the payment of interest over its own capital or distribution of dividends on account of the result in the exercise in course or on account of the profit reserve, without any loss to the posterior ratification by the General Assembly.

Profit Reserve Balance in the last three financial years:

Amounts in R$ thousand

Income Reserve 12.31.2013 12.31.2014 03.31.2015
Income Reserve unrealized 200,794 656,738 628,783


Disclosure Policy

I – Applicable Definitions

Stock Exchanges – It means the São Paulo Stock Exchange – Bovespa and any other stock exchanges or organized trading markets where the Company has Securities admitted for trading.

Company – It means CESP – Companhia Energética de São Paulo

CVM – It means the Brazilian Securities and Exchange Commission.

Investor Relations Officer – It means the Company’s officer elected to exercise the attributions provided for in CVM regulation and designated to follow and inspect the compliance with the Disclosure Policy of Material Information and Confidentiality.

Material Act or Fact – It means any decision of the controlling shareholder, resolution of the General Meeting or of the Company’s management bodies or any other act or fact of political-administrative, technical, business or economic-financial character occurred or related to the Company’s businesses, which may have a ponderable influence:

(i) in the quotation of Securities;

(ii) in the decision of investors to buy, sell or maintain the Securities;

(iii) in the determination of investors exercising any rights inherent to the condition of holders of Securities.

Examples of situations that may be Material Act or Fact are found in article 2 of Rule CVM no. 358/2002.

Related Persons – It means the Company, its direct and indirect controlling shareholders, officers, members of the board of directors, of the fiscal council and of any other bodies with technical or advisory functions created by bylaws provision, or whoever, by virtue of his/her position, function or post in the Company, its parent company, its subsidiaries or associated companies, is aware of the information of Material Act or Fact and has executed the Declaration of Compliance.

Disclosure Policy – It means the Disclosure Policy of Material Information and Confidentiality, prepared pursuant to Rule CVM no. 358/2002.

Declaration of Compliance – It means the formal instrument executed by the Related Persons and acknowledge by the Company, by means of which the Related Persons show to be aware as to the rules in the Disclosure Policy.

Securities– It means the shares, debentures, subscription bonuses, receipts and subscription rights, promissory notes issued by the Company, deposit certificates of these Securities and futures contracts and derivatives related to any of these Securities.

II – Purpose

1. The purpose of this Disclosure Policy is to set forth rules which shall be complied with by the Investor Relations Officer and other Related Persons concerning the disclosure of Material Information and the confidentiality about the Material Information which has not been disclosed to the public yet.
2. Any doubts about the provisions of this Disclosure Policy, the applicable regulation edited by the CVM and/or about the need to disclosure or not certain information to the public shall be clarified with the Investor Relations Officer.

III – Duties and Responsibilities

3. The Company’s Investor Relations Officer has the following responsibilities:
(i) to disclose and inform the CVM and the Stock Exchanges, immediately after being aware and approval in the proper levels, when necessary, any material act or fact occurred or related to the Company’s businesses which is deemed Material Information;
(ii) to supervise the wide and immediate dissemination of the Material Information simultaneously on the Stock Exchanges and in all markets where the Company has Securities admitted for trading, as well as to investors in general.
4. The communication of the Material Information to the CVM and Stock Exchanges must be made immediately by means of a written document, describing in details the acts and/or facts occurred, indicating, whenever possible, the amounts involved and other clarifications.
5. The Material Information must be disclosed to the public by means of a notice published in the newspapers used by the Company, clearly and accurately, in a language accessible to investors, and the notice may contain the summarized description of the Material Information, as long as indicating the address on the Internet where the full description of the Material Information is made available, in a content at least equal to the text sent to the CVM and the Stock Exchanges.
6. Whenever a Material Information is disclosed by any means of communication, including information to the press or at meetings of class entities, investors, analysts and selected public, in Brazil or abroad, the Material Information will be simultaneously disclosed to the CVM, the Stock Exchanges and investors in general.
7. Any Related Person who is aware of acts or facts that may be Material Information shall immediately inform, in written, the Investor Relations Officer.
8. The Related Persons who have informed an act or fact supposedly material to the Investor Relations Officer and who do not receive, in five (5) business days counted from the receiving of the information sent, a reply as to the treatment given to the information sent and received, shall immediately inform the Material Act or Fact to the CVM, upon simultaneous communication to the members of the Company’s Board of Executive Officers.
9. The Material Information shall rather be disclosed before the beginning or after the closure of the negotiations on the Stock Exchanges. In the event the Stock Exchanges are not simultaneously operating, the disclosure will be made in compliance with the business hours of the Stock Exchanges located in Brazil.

IV – Exception to the Immediate Disclosure of Material Information

10. The acts or facts which are Material Information may not be disclosed if their disclosure may pose a risk for the Company’s legal interest.
11. The Company may decide to submit to the appreciation of the CVM a matter about the disclosure to the public of Material Information that may pose a risk for the Company’s legal interest.
12. Should any Related Person verify that a Material Information not yet disclosed to the public became known by several people who (i) originally were aware; and/or (ii) decided to keep confidential the Material Information, or, should an atypical fluctuation in the quotation, price or amount traded of Securities be verified, he/she shall immediately inform the Investor Relations Officer who shall arrange for the Material Information to be immediacy disclosed to the CVM, the Stock Exchanges and the public.

V – Duty to Keep the Material Information Confidential

13. The Related Persons must keep confidential the Material Information that has not been disclosed yet, which they have access to due to their position or post, until the Material Information is disclosed to the public, as well as supervise that subordinates and third parties of their trust do the same.
14. Any violations of this Disclosure Policy verified by the Related Persons shall be immediacy informed to the Company’s Investor Relations Officer.

VI –Compliance

15. All the Related Persons, such as the direct and indirect controlling shareholders, officers, members of the board of directors, of the fiscal council and of any other bodies with technical or advisory functions created by bylaws provision, or whoever, by virtue of his/her position, function or post in the Company, its parent company, its subsidiaries or associated companies, is aware of the information of Material Act or Fact, shall comply with this Disclosure Policy of Material Act or Fact, upon the execution of the Declaration of Compliance.
16. The Company will keep in its headquarters the list of Related Persons and their respective qualifications, indicating the position or function, address and the Individual Taxpayer’s Register and/or the Corporate Taxpayer’s ID, updating it in the event of any change.
17. The Declarations of Compliance executed will be filed with the Company’s headquarters for at least five (5) years after the end of the connection existing between the signatories.


18. Since CESP is still under the São Paulo State Privatization Program (PED), the Executive Council of the PED is empowered to report all the relevant acts and facts related to the CESP privatization process till its conclusion.


Exhibit to the Disclosure Policy of Material Information and Confidentiality


I, as a Related Person, am aware and agree with the terms and conditions set forth in this Disclosure Policy of Material Information and Confidentiality, prepared in compliance with Rule CVM no. 358/2002 and duly approved by the Company’s Board of Directors.

Approved by the Board of Directors on 07/15/2002

Risk Management Policy

1 – Establish the process, methods and criteria for the identification, assessment, monitoring and communication of risks and the respective control and monitoring actions in the several levels of corporate competence.
2 – Promote actions for the management of risks in line with the Company’s Strategic Plan.
3 – Disseminate the risk management culture and promote it in all the Organization’s levels.
4 – Disseminate the concept of continuous monitoring in order to improve internal controls and processes.

Approved by the Board of Directors on 06/07/2011

Environmental Policy

Principles and Guidelines

1 – Incorporate social/environmental variables to the Company guidelines, planning and operational procedures;
2 – Fully comply with legislation in force and other requirements subscribed by the Company seeking, whenever possible, to exceed legal and normative requirements;
3 – Adopt procedures that assist in the pollution prevention, energy efficiency and responsible use of natural resources and ecosystem services;
4 – Seek the continuous improvement of the Company environmental performance, with regards to social/environmental aspects;
5 – Promote ecosystems conservation, by avoiding, mitigating or compensating for eventual impacts caused by our operation;
6 – Disseminate a social/environmental responsibility culture with employees, service renderers, suppliers, surrounding communities and other stakeholders;
7 – Establish a program for mitigation and adaptation to climate changes, based on inventory and on greenhouse gases emissions reduction.
Updated in Board of Directors Meeting, on 05/04/2015

Climate Change and Carbon Sequestering

CESP – Companhia Energética de São Paulo, concerned about the effects climate change may have on society, as well as about the economic, social and environmental dynamics of its electric energy generation activities, in face of the commitments assumed in its Environmental Policy, hereby formalizes its commitment to promoting sustainable development and exercising social responsibility and environmental management in its activities.

This commitment presupposes the continuous assessment of its activities in relation to climate change issue on the national and international levels, whenever possible incorporating them to its strategic planning.

Approved in Board of Directors Meeting, on 05/04/2015 (item 7 of Environmental Policy)

Company Securities Trading Policy

1. The objective of the Trading Policy is to establish the rules that the Company and Related Persons should follow in relation to the trading of securities issued by the Company in a transparent and ordered manner, avoiding improper use of relevant information that is still confidential, in accordance with CVM Instruction 358/2002 and amendments thereto.

2. For the purposes of this Policy, the term Related Persons refers to the Company, Controlling Shareholders, Officers, members of the Board of Directors, Fiscal Council and any other technical or advisory bodies created by statutory provision, as well as employees who have frequent access to information that may be considered as material act or fact by the Officers and members of the Board of Directors of the Company and who have expressly adhered to this Trading Policy and are obliged to comply with its rules.

3. Pursuant to CVM Instruction 358/2002, the trading of Company securities by the Company or Related Persons is prohibited before the disclosure of Relevant Information to the market. Security trading is also prohibited during processes of acquisition or sale of Company shares by the Company or its subsidiaries, affiliate companies or other jointly-controlled company; if a stock option or mandate has been granted for the same purpose; or if the Company aims to carry out any incorporation, total or partial spin-off, merger, transformation or corporate restructuring. In the context of a public offering of securities and under the terms of article 48 of CVM Instruction 400/2003, Related Persons shall abstain from trading Company securities until the publication of the announcement of conclusion of the offering.

4. . Related Persons may not trade Securities issued by the Company: (i) fifteen (15) days calendar days prior to the disclosure of the quarterly information (ITR report) and annual information (standardized financial statements (DFP) and Reference Form), in accordance with paragraph 3 of article 15 of CVM Instruction 358/2002; and (ii) between the date of resolution by the competent body to increase the capital, pay dividends and interest on equity and the publication of the respective notices and announcements.

5. Related Persons who leave the Company prior to the disclosure of any Relevant Information generated during their management at the Company may not trade the Securities issued by the Company: (i) within a period of six (6) months after they leave the Company; or (ii) until the Company discloses the Relevant Information to the market.

6. In the event an agreement or contract is entered into for the purpose of transferring the respective controlling interest, or if any option or mandate is granted for the same purpose, or if the Company aims to carry out any incorporation, total or partial spin-off, merger, transformation or corporate restructuring, and while the operation is not made public via the publication of a material fact, the Company’s Board of Directors may not resolve on the acquisition or sale of own shares.
7. The prohibition to trade Company Securities will no longer be in effect once the Company discloses the respective Relevant Information to the market. However, said prohibitions will remain in effect even after the disclosure of the Relevant Information if trading of the Securities by Related Persons could interfere, with prejudice to the Company or its shareholders, with the act or fact associated with the Relevant Information.

8. Pursuant to CVM Instruction 358/2002, Related Persons may trade the Securities issued by the Company in compliance with item 3 above, provided that they meet at least one of the following characteristics: (i) acquisition of treasury stock through private trading, resulting from the exercise of a stock option under a stock option plan approved by a shareholders’ meeting; or (ii) trading of Securities by Related Persons with the purpose of making a long-term investment; these securities may not be sold prior to one hundred and eighty (180) days as of the date of their respective acquisition.

9. Restrictions to this Trading Policy do not apply to the investments funds in which the Related Persons hold membership interest, provided that these are not exclusive investment funds or investment funds whose trading decisions of the administrator or manager of the portfolio are influenced by Related Persons.
10. All Related Persons and, at the Company’s discretion, other persons that the Company deems necessary or convenient, who will also be considered Related Persons, must sign the Term of Adhesion to this Trading Policy (under the terms of the Attachment herein).

Approved by the Board of Directors on 06/07/2011

Corporate Social Policy

The Management of CESP approved in June 2007 the Corporate Social Policy. The formalization of the Policy comes to meet the new demands of market such as corporate sustainability, social responsibility and socioeconomic development, based on principles that underlie practices enshrined in the Company.

These practices are important matters for competitiveness of the Company´s business and its relationship with shareholders, creditors, customers, employees, partners, community, government and society.

In June 2015, in order to adjust it to the concepts prevailing in the market, the scope of principle 1.3 has been expanded, explaining rejection and prohibition of any practice of sexual exploitation of men, women, children and youth.

1. Corporate Social Policy

1.1. To not permit the use of child labor in any form, whether directly or indirectly, within the company.

1.2. To exclude any supplier of goods or services that uses, whether directly or indirectly, child or slave labor, or any manner of forced or compulsory labor, and to publish this fact in all company public notices.

1.3. Reject oppressive practices of coercion to forced or compulsory labor, abuse of power as moral or sexual harassment, and the practice of sexual exploitation of men, women, children and youth in any form.

1.4. To value human diversity, standing behind for the premise that all groups, minority or otherwise, are entitled to their place in society, and to distribute this creed to all employees.

1.5. To encourage diversity in work force, ensuring equal opportunities in terms of employment and professional growth, not discriminating on the basis of race, skin color, sex, sexual orientation, religion, nationality, marital status, age or physical condition.

1.6. To not tolerate any form of abuse of human rights, of any nature, by employees, management, outsourcers or agents.

1.7. To not permit, under penalty of imposing sanctions, any discriminatory act or practice of any kind that violates the principles of equal rights and respect for human dignity.

1.8. To act severely and to condemn situations involving actions that foster illegal practices, under penalty of imposing sanctions, in accordance with the company’s Personnel Regulations in effect.

2. Guidelines of the Corporate Social Policy

2.1. To ensure that HR Rules and Procedures used in recruiting and hiring process are in strict compliance with the Apprenticeship Law of and the Brazilian Child and Adolescent Statute.

2.2. To ensure that HR Rules and Procedures honor the criteria of competence and professional performance.

2.3. Based on the current policy in effect, to maintain and encourage the Corporate Volunteer Program through educational, sports and leisure activities organized by volunteer employees for the community, children, youth, senior citizens and the underprivileged population in general.

2.4. To support educational initiatives and to welcome local schools that shows an interest in social and environmental activities.

2.5. To support educational activities for children and youth in a manner consistent with its status as a sponsor of the Child Citizen Institute.

2.6. To ensure funds for the continuous growth of the program that provides opportunities for professionally training young students between the ages of 14 and 24, in accordance with the Apprenticeship Law.

2.7. To assist managers and employees in resolving professional conflicts through negotiation and administrative actions, using the techniques and services of specialized departments to prevent oppressive practices.

2.8. To maintain social and other specialized services as a confidential channel for employees to voice any discriminatory practices.

2.9. To strengthen and maintain permanent channels and dialogue with the communities in which it operates in order to clarify, prevent and control the possible impacts of its activities and to establish fair and balanced relationships by encouraging, promoting and participating in socially-responsible and citizen-strengthening initiatives.

2.10. To ensure creation and disclosure to stakeholders of the Code of Corporate Conduct, the corporate document that will clearly establish the principles, behavior, rules and responsibilities that will guide the actions of the company’s management, employees, suppliers, service providers and the community.

Approved by the Executive Board on June 28, 2007 and updated on June 8, 2015.

Conversion Policy for Class “A” Preferred Shares

This policy was elaborated as per the terms of article 5 of the Company’s Bylaws and it aims to establish the rules that should be observed for converting class “A” (“PNA”) preferred shares into common (“ON”) shares and/or class B (“PNB”) preferred shares.

Every year, always at the April meeting, the Board of Directors will deliberate on opening a period for shareholders who own class A preferred shares and who are interested in converting these shares at a proportion of one share owned for one common share or for one class B preferred share.

The conversion period will begin during the first two weeks of May and it will run for not less than 15 (fifteen) consecutive days.

In order to make use of this benefit, shareholders shall have made use of all rights referring to those shares owned and present, at the act of conversion, documents for identification.

For benefit consistency, the cut-off date for capital interest payments related to the Quarterly Information for the first quarter of each year shall be set for after the conversion period.

Approved by the Board of Directors on 12/10/2013