Statute – Administrative Council Aumentar Diminuir



Purpose of the Internal Regiment

Article 1 – The present Internal Regiment (“Regiment”) govern the functioning of the Administration Council (“Council”) of CESP – Companhia Energética de São Paulo (“Company”), as well as the relationship between the Council, its Committees and other company, in compliance with the provisions of the Bylaws and legislation in force.


Administration Council’s Mission Statement

Article 2 – The Administration Council is the collegiate deliberation body responsible for the superior guidance of the Company, representing the interests of shareholders, whose mission is to ensure the valuation of equity, the Company’s business plan, the vision, mission and values of CESP, with emphasis on excellence and business sustainability. The Administration Council is the guardian of the Bylaws and its members must always decide in the best interests of the Company.

Article 3 – The Council shall decide on strategic issues, among others:

(i) to promote and observe the Company’s corporate purpose;
(ii) to take care of the interests of the shareholders, considering the other interested parties; (iii) to ensure the Company’s perenniality, with a long-term perspective that incorporates economic, social, environmental and good corporate governance aspects into the definition of business and operations;
(iv) to ensure that the established management guidelines are reflected in the corporate budget;
(v) to ensure that strategies and guidelines are effectively implemented by the Council, without intervening in operational matters; and
(vi) to prevent and manage situations of conflict of interest or divergence of opinion, in the interests of the Company.


Composition, Mandate and Investiture

Article 4 – The Advisors’ composition and mandate are those established by the Bylaws and by the Shareholders’ Meeting.

Article 5 – Immediately after the Meeting that elects Advisor(s), the Secretary of the Council shall contact the new Advisor(s) to deliver them the documents below, obtaining their signature(s), as necessary:

(i) Copy of this Internal Regiment.
(ii) Calendar of Meetings scheduled for the remainder of the year.
(iii) Copy of the Administrators’ Liability Insurance Policy.
(iv) Draft of the Administration Council, Fiscal Council and Committees of the last 12 months.
(v) Term of Possession.
(vi) Statement of Disengagement.
(vii) Statement of Consent with the Regulation of Differential Levels of Trading in which CESP is registered.
(viii) Term of Adherence to the Regulation of the Market Arbitration Chamber of B3.
(ix) Term of Adherence to the Policy for Disclosure of Relevant Act or Fact.
(x) Instrument of Adherence to the Company’s Share Trading Policy.
(xi) Adherence to the Policy for Related Party Transactions.
(xii) Term of Adherence to the Code of Conduct and Integrity.
(xiii) The information provided for in Article 8, item v of these Rules of Procedure.

Paragraph one – The Advisors’ investiture is conditioned on the delivery of the above terms and the protocol of receipt of the other documents, duly signed, to the Council Department until the first ordinary meeting that occurs after its election.

Paragraph two – The documents cited in this Article shall be filed at the Company’s headquarters for at least five (5) years after the termination of the Advisor’s relationship with CESP.

Article 6 – A member who fails to attend two (2) consecutive meetings shall be deprived from receiving the fees for the month in which said accumulation of absences is verified.


Council’s competencies

Article 7 – The competencies of the Administration Council are those determined by law, by regulations, in particular those of the Brazilian Securities Commission (CVM) and by the Bylaws, and the Council may:

(i) Approve and implement the risk management policy and oversee the risk management and internal control systems established for the prevention and mitigation of the main risks to which the Company is exposed, including those related to the integrity of the accounting and financial information and those related to the occurrence of corruption and fraud.
(ii) Establish specialized committees, with specific attributions of analysis and recommendation on certain matters, and approve the respective internal regulations;
(iii) Appoint the members of the specialized committees, which shall have a mandate identical to those of the Advisors;
(iv) Approve the Code of Conduct and Integrity;
(v) Draw up, approve and update this Internal Regiment;
(vi) Ensure that all necessary information and support for the informed exercise of their voting rights at Shareholders’ Meetings are provided to shareholders;
(vii) Approve the hiring and dismissal of the independent auditors and call them to provide clarifications to the Administration Council, after hearing the recommendations of the Audit Committee;
(viii) Suggest, with the approval of a simple majority of its members, the hiring of specialists and experts to better instruct the matters subject to its deliberation;
(ix) Resolve on the quarterly financial statements and on the anticipation of dividends in the form of Interest on Own Capital;
(x) Define, at the last meeting of the fiscal year, the Calendar of Regular Meetings for the following year.

Sole paragraph – The attributions and powers of the members of the Administration Council are non-transferable, and absences must be justified.


Duties of Members of the Administration Council

Article 8 – It is the duty of all Advisors, in addition to those provided for in Law, in the applicable regulations and in the Bylaws:

(i) to attend meetings of the Council being duly prepared, by examining the documents made available and actively and diligently participating in them;
(ii) to keep any and all information of the Company to which it has access confidential, due to the exercise of the position, as well as to require the same confidential treatment by the professionals who advise it, using it only for the exercise of their roles as Advisors, under penalty of responding for the act that contributes to its undue disclosure;
(iii) to refrain from intervening, alone or jointly with third parties, in any dealings with the company, its controlling shareholder and also between the company and its subsidiaries and affiliates of the administrators and controlling shareholder, as well as other companies that, with any such person, is a member of the same group in fact or in law, except with prior and specific approval of the Council;
(iv) to declare, prior to the resolution that, for any reason, has a particular or conflicting interest with the Company in relation to a certain subject submitted for its appreciation, abstaining from its discussion and vote;
(v) to ensure the adoption and compliance with good corporate governance practices by the Company.
(vi) to communicate, upon the investiture of the position and, on a monthly basis, to the Investor Relations Officer of CESP, the quantity and characteristics of the securities issued by the Company which they own, or by the spouse, by the companion and dependents included in the annual income tax return, informing the shareholding made, if any, within 3 (three) days after the negotiation, mentioning the date, quantity, characteristics, as well as form and purchase price and/or sale of shares, guaranteeing that such information will be provided to the Brazilian Securities and Exchange Commission, pursuant to CVM Instruction 358;
(vii) to deprive from any kind of direct or indirect advantage because of the position they occupy.
(viii) to participate in specific training promoted by the Company or by the Defense Council of State Capitals – CODEC.


Presidency of the Council

Article 9 – The Chairman of the Administration Council shall be appointed by the General Meeting, and the choice may not be made by the Company’s Chief Executive Officer, pursuant to the Bylaws.

Article 10 – The President of the Council has the following attributions, without prejudice to others that confer upon it the Bylaws and Law:

(i) presiding the meetings of the Council;
(ii) ensuring the effectiveness and good performance of the Authority;
(iii) ensuring the effectiveness of the follow-up and evaluation system by the Council, of the performance of the Company and of the Executive Board Council, and, individually, of the members of each of these bodies;
(iv) organizing and coordinating, with the collaboration of the Secretary of the Council, the agenda of the meetings, after hearing, if necessary, the other Advisors, the Chief Executive Officer and the other Executive Officers;
(v) ensuring that the Directors individually receive, with the proper advance to the meeting date, the necessary documentation for the examination of the matters;
(vi) proposing to the Council the Annual Calendar of Ordinary Meetings;
(vii) calling, on its own initiative or at the request of any Advisor, Company’s Directors to attend meetings and provide clarifications or information on the matters under consideration;
(viii) ensuring that the decisions taken by the Administration Council are duly implemented, and that the Company provides the information requested by the Advisors;
(ix) in the absence or impediment of the President of the Council, the Chairmanship of the assignments shall be incumbent upon the older Advisor.


Executive Department of the Council

Article 11 – The Executive Secretary of the Council shall be chosen by the Chairman of the Council from among professionals with a recognized technical competence and knowledge in the areas of corporate law, corporate governance and operations, and shall report directly to the Council.

Article 12 – It shall be incumbent upon the Executive Secretary of the Council:

(i) to disclose the annual calendar of ordinary meetings, as deliberated by the Council;
(ii) to organize the agenda for the matters to be dealt with, based on the proposal submitted by the Company’s Board of Directors and requests from Directors, in compliance with the legal, normative and statutory provisions, submitting it, prior to distribution, to the Chairman of the Council;
(iii) to issue, on behalf of the Chairman of the Board, the convening of the meetings in advance of the Bylaws and indicating the date, time, place and agenda of the meeting;
(iv) to forward to Advisors the necessary documents for the consideration of the matters to be deliberated, including, as the case may be, the Board of Directors’ Resolution and respective Report, technical and legal manifestations and other documents related to the matter;
(v) to submit the draft of the meeting prior to the approval of the Council and, as soon as approved, draw up and collect the signatures of the Directors present, in a proper book;
(vi) to preside meetings and draw up minutes summarizing in an objective way the matters discussed and the resolutions approved by the Council;
(vii) to forward to the Company the draft of the meetings, duly approved and signed, for registration and publication, providing, when necessary, the respective statements of drafts;
(viii) to file drafts, statements, deliberations, as well as the documents and material used in the meetings, to be inquired by interested parties, upon request;
(ix) to provide, upon the investiture of new Advisor(s) in office, all the documentation provided for in Article 5 of this Regiment, obtaining signatures in the documents required;
(x) to follow up the progress of decisions or requests of the Council, with the Company’s Board of Directors;
(xi) to follow up and record the attendance of Advisors at meetings and informing the body responsible for the payment of remunerations.


Meetings of the Administration Council

Article 13 – The Administration Council shall meet ordinarily, according to the Calendar of Ordinary Meetings and, extraordinarily, whenever necessary in the interests of the Company.

Article 14 – The meetings of the Administration Council shall be called by its Chairman, or by the majority of the Advisors in office, by sending written or electronic correspondence to all Directors, respecting the advance provided for in the bylaws, indication of place, day and time for the meeting and the matters to be dealt with.

Article 15 – The meetings of the Administration Council shall be held in the presence of a majority of its members in office, complying with the minimum legal and statutory number, being the chairmanship of the assignments incumbent upon the Chairman of the Administration Council or, failing him or her, the older Advisor.

Article 16 – The Administration Council shall deliberate by a majority vote of those present at the meeting; in the event of a tie, the proposal having the vote of the Advisor presiding over the meeting shall prevail.

Article 17 – The meetings of the Administrative Council shall be held as follows:

I. opening of the meeting and verification of attendance;
II. reading, discussion and approval of the draft of the previous meeting;
III. reading, discussion and voting on each item on the agenda;
IV executive session (without the participation of employees and directors).

Paragraph One – The Chairman, on their own initiative or at the request of any Advisor, may call Company’s executives for clarification or create Technical Committees for specific assignments.

Paragraph Two – Each member of the Council is authorized to submit items to be included in the agenda, which must be submitted to the Secretary of the Council at least 10 (ten) days before each meeting.

Article 18 – At the last meeting of each financial year, the President of the Council shall propose the dates for the annual calendar of ordinary meetings for the following financial year, which shall, at first, cover the following topics:

January: Judicial Contingencies
February: Actuarial Revaluation of the Pension Fund
Self-assessment of the Administration Council
March: Financial Statements for the previous year
Income Distribution
Sustainability report
April: Strategic Risk Matrix
Evaluation of the Remuneration Policy for Income from the previous year
May: First Quarter Financial Statements
Assumptions for Collective Bargaining Agreement
Annual Letter of Governance and Achievement of Public Objectives
Analysis of the fulfillment of the goals and results of the business plan and the long-term strategy
June: Report of External Auditors’ Recommendations
Approval/review of the Policy for Related Party Transactions
Evaluation of the Company’s directors
July: Business Performance Evaluation
August: Financial Statements for the second quarter
September: Internal Control System
October: Strategic Risk Matrix
November: Financial Statements for the third quarter
December: Business Budget
Earnings Remuneration Policy – Indicators and Targets
Strategic Planning for the next 5 years
Business Plan for the following annual financial year



Article 19 – The assignments of the Administration Council shall be recorded in the draft, which shall be drawn up by the Secretary of the Council.

Paragraph one – The draft shall be sent to the Advisors within 5 (five) business days, for comments and reviews and their approval shall occur until the next meeting.

Paragraph two – At first, the draft of the Administration Council shall be considered public, and shall be made available as an statement in the electronic system of the Securities Commission.

Paragraph three – In the event of confidentiality or relevance, the Council may decide not to disclose any draft or excerpts thereof.

Paragraph four – The Investor Relations Officer shall be responsible for communicating to the shareholders relevant acts or facts derived from decisions of the Administration Council, prior to the publication of the draft, if necessary, observing the provisions of the current legislation and the Policy for Disclosure of Act or Relevant Fact approved by the Council.

Paragraph five – TThe separate votes occasionally pronounced by the Advisors shall also be published.

Paragraph six – The Board of Directors shall arrange for the disclosure of the decisions of the Administration Council to the employees, in the manner it deems most effective.


Specialized Committees

Article 20 – The Council may create up to three (3) specialized committees, which shall operate simultaneously, without decision-making, and shall be composed of members of its Administration Council, whose task is to study specific issues of interest to the Council.

Paragraph one – In the meetings, administrators, employees, specialists or other persons whose contribution is useful to the performance of the assignments may participate as guests, thereby with no voting rights.

Paragraph two – The Committees shall record their assignments in drafts, which shall be sent in a timely manner to all Advisors.

Article 21 – The Committees shall study the matters within their competence and prepare proposals to the Council. The material required for examination by the Board shall be made available together with the recommendation for voting, and the Advisor may request additional information, should they deem necessary.


Audit Committee

Article 22 – The Company shall have an Audit Committee, as a technical body of permanent assistance to the Administration Council and whose duties are defined in the Bylaws and in its own bylaws.

Article 23 – The Administration Council shall approve the Internal Regiment of the Audit Committee, which shall regulate the rules of its functioning, as well as its specific responsibilities and attributions.

Article 24 – The Committee shall be composed of at least three (3) and at most five (5) members, most of whom are independent, elected and dismissed by the Administration Council, without a fixed term of office, with at least one member of the Committee having to have a recognized experience in matters of corporate accounting.

Paragraph one – The Audit Committee shall be coordinated by an Independent Advisor.

Paragraph two – The Advisor who accumulates executive positions may not participate in the Audit Committee.

Article 25 – The Audit Committee shall, where necessary, have resources to ensure proper functioning, approved by the Administration Council.

Paragraph one – For the exercise of its functions, the Audit Committee may request the hiring of external professionals.

Paragraph two – The Advisors who are members of the Audit Committee shall have a remuneration compatible with their responsibility and workload.


Interaction with the Fiscal Council

Article 26 – The Administration Council may meet with the Audit Council to deal with matters of common interest and exchange of clarifications and information of interest to the parties.

Article 27 – The draft of the Fiscal Council shall be sent in due time to the members of the Administration Council, and vice versa.


General Provisions

Article 28 – Requests for information or requisitions of Company’s documents by the Advisors shall be formally forwarded to the Secretary of the Administration Council, who shall inform the Chairman of the Administration Council.

Article 29 – The members of the Eligibility and Advisory Committee may attend meetings of the Administration Council, with the right to speak, but not to vote, in accordance with the Bylaws.

Article 30 – These Bylaws may be amended after discussion and approval by the Administration Council, and the omissions shall be resolved by the Chairman.

Article 31 – The present Internal Regiment was approved at the Administration Council’ meeting, held on April 14, 2015 and shall become effective as of this date. Its update was approved at the Administration Council’s meeting, on August 13, 2018.

Statute revised by the Board of Directors’ Meeting held on 08.13.2018