Statute – Executive of Board Aumentar Diminuir

INTERNAL REGULATIONS OF THE EXECUTIVE BOARD

CHAPTER I
ORGANIZATIONAL STRUCTURE

Article 1 – The Company’s Executive Board is comprised as follows:

1. Chief Executive Officer
2. Administrative Officer
3. Chief Financial Officer and Investor Relations Officer
4. Director of Generation

Sole Paragraph – All members have a unified term of 2 (two years), three (3) consecutive reappointments.

CHAPTER II
POSSESSION, IMPEDIMENTS AND SEALINGS

Article 2 – It is a condition for investiture in the position of the Board of Executive Officers the assumption of commitment with specific goals and results to be achieved by the Company.

Article 3 – The members of the Executive Board shall be invested in their positions by signing an investiture instrument drawn up in the respective draft book.

Paragraph One – The investiture will be conditioned to the submission of a declaration of assets and values, in the form provided for in current state legislation, which shall be updated annually and at the end of the term.

Paragraph Two – The Directors will receive, at the time of the investiture and upon signature of all required documents, a copy of this regulation, of these Bylaws, of the

Company’s Internal Policies, of the Code of Conduct and Integrity and other documents required for the exercise of their mandate.

CHAPTER III
VACANCY AND REPLACEMENTS

Article 4 – In the absence or temporary impediment of any Director, the Chief Executive Officer shall appoint another member of the Board of Executive Officers to complete the roles.

Sole Paragraph – In its absences and temporary impediments, the Chief Executive Officer shall be replaced by the Chief Officer appointed by him or her.

Article 5 – In case of vacancy, and until a successor is elected, the Chief Executive Officer will be replaced, in turn, by the Chief Financial Officer and by the Senior Director.

CHAPTER IV
COMPETENCES

Article 6 – In addition to the duties defined by law, it is incumbent upon the Collegiate Board of Executive Officers, pursuant to article 20 of the Bylaws:

I. ELABORATING AND SUBMITTING TO THE ADMINISTRATION COUNCIL’S APPROVAL:

a) The strategic planning proposal, containing the updated long-term strategy with analysis of risks and opportunities for at least the next five (5) years, action guidelines, income goals and performance evaluation ratios;
b) The proposal of business plan for the following annual exercise, annual and multiannual programs, indicating the respective projects;
c) The Company’s costing and investment budgets, indicating the sources and applications of the resources, as well as their changes;
d) The assessment of the performance result of the Company’s activities;
e) The Company’s quarterly reports, accompanied by the balance sheets and other financial statements;
f) Annually, the draft of the management report, accompanied by the balance sheet and other financial statements and related explanatory notes, with the Independent Auditors’ report and the proposal for allocation of the result for the year;
g) The Internal Regulations of the Board of Executive Officers and the Company’s regulations;
h) The proposal to increase share capital and reform the Bylaws, after hearing the Fiscal Council, when applicable;
i) The proposal of the personnel policy;
j) The proposal to increase the limit on advertising and sponsorship expenses.

II. APPROVING:

a) The technical-economic evaluation criteria for the investment projects, with the respective delegation plans of responsibility for its execution and implementation;
b) The chart of accounts;
c) The Company’s annual insurance plan;
d) Residually, within the statutory limits, everything that relates to the Company’s activities and which is not within the exclusive competence of the Chief Executive Officer, of the Administration Council or the General Meeting.

III. AUTHORIZING, ONCE THE LIMITS AND GUIDELINES FIXED BY THE LEGISLATION, BYLAWS AND ADMINISTRATION COUNCIL ARE COMPLIED WITH:

a) Acts of resignation or judicial or extrajudicial transaction, to put an end to disputes or pending issues, which may set limits of value for the delegation of the practice of these acts, by the Chief Executive Officer or any other Director;
b) The confirmation of any legal businesses involving acquisition, disposal or encumbrance of assets, as well as assumption of obligations in general, when the value of the transaction exceeds any of the limits below and is less than 2% (two percent) of the share capital:

  • For Rental of Real Estate – R$ 120,000;
  • Fixed Asset Order – R$ 300,000;
  • Deactivation Order – R$ 200,000;
  • Bidding – limit value of Price Purchase R$ 650,000;
  • Signing of a contract related to an agreement and the marketing of the use of CESP’s facilities and telecommunication system – R $ 150,000;
  • Agreement on Judicial Proceedings – R$ 400,000, and
  • For the sale of real estate, financing with national and international entities and foreign travel – any amount, subject to compulsory submission to the Executive Board when the value is equal to or greater than 2% (two percent) of the share capital.

Article 7 – In addition to the legal obligations, especially those set forth in Act 6,404/1976, Act 13,303/1616 and State Decree No. 62,349/2016, the following are common responsibilities of each Director:

a) Managing the subjects of his specific competences with the care and diligence that every active and responsible person usually employs in the administration of their own business, complying with principles of indirect administration, especially of legality, purpose, motivation, reasonableness, morality, legal security, impersonality, publicity and efficiency;
b) Not disclosing any information that has not yet been disclosed to market knowledge, obtained by reason of the position and capable of influencing the price of securities in a significant way, being forbidden to use the information to obtain for themselves or for someone else, advantages over the purchase or sale of securities;
c) Responding to the Company’s obligations regarding the concession agreements, regulatory aspects and applicable legislation, linked to the activities under his responsibility;
d) Proposing the policies, guidelines and norms related to the activities under their responsibility to the Collegiate board;
e) Participating in special projects in matters of relevant strategic interest;
f) Adopting daily practices of compliance, risk management and internal control in the activities under their responsibility, applying and monitoring the action plans to mitigate the identified risks;
g) Applying the principle of segregation of duties, in order to avoid the occurrence of conflicts of interest and fraud;
h) Encouraging the use of the institutional complaint channel;
i) Complying with and enforcing the Company’s Code of Conduct and Integrity.

Article 8 – The following attributions are defined to the Chief Executive Officer, pursuant to Article 21 of the Bylaws, and to the other members of the Executive Board:

I. CHIEF EXECUTIVE OFFICER

a) Representing the Company, actively and passively, in court or out of court, with a possibility of being constituted an attorney-in-fact with special powers, including to receive initial citations and notifications, in compliance with Article 22 of the Bylaws;
b) Institutionally representing the Company in its relations with public authorities, private entities and third parties in general;
c) Convening and presiding the meetings of the Executive Board;
d) Coordinating the activities of the Executive Board;
e) Issuing acts and resolutions that constitute the deliberations of the Executive Board or that arise from them;
f) Coordinating the Company’s ordinary management, including the implementation of the guidelines and compliance with the resolutions taken by the General Meeting, by the Administration Council and the Collegiate Board;
g) Coordinating the activities of the other Directors;
h) Promoting the organizational and functional structuring of the Company;
i) Issuing the normative instructions that govern the activities between the different areas of the Company;
j) Leading the activities related to compliance, risk management and internal control;
k) Being accountable for the activities of the Legal and Communication areas, and administratively by the Internal Audit area.

II. ADMINISTRATIVE DIRECTOR

a) Being accountable for the supply of national and imported materials and equipment required by the Company, as well as for contracting services and works, including bidding, sale, hiring and inventory management activities;
b) Being accountable for executing policies, guidelines and standards of supplies, general services, transportation administration services, telephony, graphic arts, micrographic and reprographic, general department, documentation and archiving, safety and patrimonial and corporate surveillance of the Company;
c) Being accountable for the implementation of policies, guidelines and standards for managing real estate;
d) Being accountable for inspecting the properties of the edges of reservoirs at the Company’s plants;
e) Being accountable for the evaluation of the properties required for the Company’s activities;
f) Being accountable for the implementation of the Company’s information technology policies, guidelines and standards;
g) Being accountable for the implementation of policies, guidelines and standards related to the administration, development, health and safety activities of the Company’s human resources;
h) Being accountable for the negotiation of the Collective Bargaining Agreement, in accordance with the guidelines of the Presidency and Administration Council.

III. FINANCIAL DIRECTOR AND INVESTOR RELATIONS

a) Being in charge of the execution of the Company’s financial policies and guidelines;
b) Being accountable for the Company’s economic-financial planning and financial-budgetary management;
c) Being responsible for raising the funds necessary for approved programs, maintaining control over debt;
d) Being accountable for the accounting records, statements and accounting practices within the scope of the Company, also in the fiscal, equity and cost aspects;
e) Being in charge of the economic-financial studies necessary to conduct the Company’s business;
f) Being accountable for the management of the securities issued by the Company;
g) Being accountable for the relations with shareholders, investors, capital markets and their regulatory entities;
h) Being in charge of the Company’s insurance policies and guidelines.

IV. GENERATION DIRECTOR

a) Being accountable for the production, policies and compliance with the operational guidelines of the Company’s ventures;
b) Being accountable to the commissioning, operation, maintenance, administration, security and patrimonial surveillance of the Company’s plants and reservoirs;
c) Being in charge of the management of contracts for projects, works, services, equipment and electromechanical assemblies of the Company’s plants and complementary facilities;
d) Being accountable for structuring policies and engineering guidelines for the plants in operation;
e) Being in charge of the Company’s electric and energy planning;
f) Being in charge of the Company’s electricity trading;
g) Being in charge of the fulfillment of regulatory obligations within the scope of the Executive Board;
h) Being in charge of the execution, administration and management of the Company’s environmental policies and guidelines;
i) Being accountable for administrating and managing the Company’s water resources;
j) Being in charge of the studies, technical specifications and basic and executive Civil Engineering, Architecture, Geology and Electromechanical Engineering project of the new development of energy generation and transmission, as well as of the multiple uses of the water system and other complementary works;
k) Being responsible for managing, planning and executing civil works, electromechanical assemblies and industrial facilities of new enterprises;
l) Being responsible for the studies aiming at CESP’s participation in new electric power projects and private partners in its projects;
m) Being accountable for planning, designing and executing the expansion of the Company’s energy generation, through new generating units or new ventures;
n) Being in charge of the Company’s R&D (Research and Development) Program.

CHAPTER V
EXECUTIVE BOARD’ MEETING

Article 9 – The Board of Executive Officers shall ordinarily meet at least two (2) times a month and, extraordinarily, by a call of the Chief Executive Officer or other two Directors, pursuant to Article 19 of the Bylaws.

Sole Paragraph – The meetings of the Collegiate Board shall be installed with the attendance of at least half of the Directors in office, considering that the matter is approved by obtaining the agreement of the majority of those present; in the event of a tie, the proposal that counts on the vote of the Chief Executive Officer shall prevail.

Article 10 – All matters that should merit the consideration of the Executive Board must be sent three (3) days in advance to the Department of Meetings of the Executive Board, attached to the Presidency.

Paragraph One – The Board Meeting Departments shall have the following attributions:

a) Receiving the material to be analyzed by the Executive Board;
b) Organizing the agenda of the subjects to be treated;
c) Forward the agenda to be discussed until at least forty-eight (48) hours before the regular meeting;
d) Forward the matters to be dealt with by the Executive Board, at least ten (10) days in advance.

Paragraph Two – In exceptional cases, at the discretion of the Chief Executive Officer, other matters not included in the agenda may be discussed without observing the deadlines defined in this article.

Article 11 – The Chief Executive Officer, on their own initiative or at the request of any Officer, may call other employees to attend meetings and provide clarifications or information on the matters under consideration.

Article 12 – The Chief Executive Officer shall appoint the secretary of the meeting and the work shall be carried out as follows:

a) Opening of the meeting;
b) Attendance confirmation;
c) Communications;
d) Reading of the Agenda;
e) Discussion and voting of the matter concerned;
f) Approval of the Executive Board resolutions;
g) Information and general matters;
h) Closing.

Sole Paragraph – At the request of any of its members, the Executive Board may decide to change the agenda to include urgent or relevant matters or to exclude matters.

CHAPTER VI
DECISIONS

Article 13 – The resolutions of the Executive Board shall be recorded in drafts drawn up in the proper book and signed by all attending.

Sole Paragraph – The Board’s Resolutions shall be numbered each year and duly signed by whoever has presided the meeting.

Article 14 – For the matters discussed in the meeting, the Executive Board will have a file in which the documents analyzed will be kept.

Article 15 – For the purpose of disclosure, decisions involving information of a strategic nature, whose disclosure may prove to be detrimental to the Company’s interest, shall be considered confidential, and other decisions, in accordance with the level of complexity they present, shall be considered restricted or unrestricted, according to the indication of the members that approve it, observing the transparency requirements provided by law.

Article 16 – The disclosure of information about the Company, which may impact the quotation of its securities, or its relations with the market, consumers and suppliers, shall be exclusively the responsibility of the Chief Financial and Investor Relations Officer.

CHAPTER VII
DOCUMENTS

Article 17 – The matters of the Board Meetings and the draft of the Resolutions shall be forwarded to the Executive Board Meeting Department by the interested area and shall contain the following items:

a) EXECUTIVE BOARD’ REPORT

Standard header containing the number of the Report with the identification of the area that issues it (e.g. area/no./year), date, reporter(s) and subject (brief description of the proposal purpose);
The report framework is divided into 3 (three) parts:

I – HISTORY
II – REPORT
III – CONCLUSION

In the HISTORY, the origins of the subject, its antecedents (if any) and what is important to contextualize the matter that will be approached should be displayed.
The REPORT shall state the reasons and arguments that justify the decision of the Board of Executive Officers.
In the CONCLUSION, the proposals made by the Director, rapporteur of the matter, should be placed on the Executive Board’ decision.

b) EXECUTIVE BOARD’ RESOLUTION
Standard document bearing header, Resolution number, date, reporter(s), subject and decision of the Board of Executive Officers.
The BOARD RESOLUTION should adequately reflect the same proposal that was presented in item III of the Report – CONCLUSION.

CHAPTER VIII
AMENDMENT AND APPROVAL OF THE EXECUTIVE BOARD’ INTERNAL REGULATIONS

Article 18 – It is the responsibility of the Presidency to review and update the Internal Regulations of the Executive Board, which must be done every twenty-four (24) months, even if there are no changes.

Sole Paragraph – Approval of the Internal Regulations shall be the responsibility of the Collegiate Executive Board, which shall submit it to the Administration Council for approval, as determined in article 20, item “g” of the Bylaws.

CHAPTER IX
GENERAL ORDER PROVISIONS

Article 19 – The cases omitted in these Internal Regulations and the doubtful interpretation of their items will be resolved by the Collegiate Board.

Article 20 – These Internal Regulations of the Executive Board shall enter into force on 09/24/2018, the date of their approval by the Administration Council and shall be filed at the Company’s headquarters.

-