ARTICLE 1 – CESP – Companhia Energética de São Paulo is a corporation governed by these By-laws (“Bylaws”), by the provisions of the Law No. 6,404, dated December 15th, 1976, as amended (“Brazilian Corporate Law”) and other applicable legal provisions.
First Paragraph – With the Company’s admission to the special listing segment called Level 1 of Corporate Governance of B3 SA – Brasil, Bolsa, Balcão (“Level 1″ and “B3″), the Company, its shareholders, directors, officers and members of the fiscal council are subject to the provisions of the Level 1 of Corporate Governance Listing Regulation of B3 S.A. – Brasil, Bolsa, Balcão (“Level 1 Regulation”)
Second Paragraph – The duration of the Company is undetermined.
Third Paragraph – The Company is headquartered in and subject to the jurisdiction of the Capital of the State of São Paulo.
Fourth Paragraph – Insofar as it is necessary to achieve its corporate purpose and observing its area of operation, the Company may, by resolution of the Executive Board, change Company’s headquarter address (provided the provisions of the Third Paragraph above), as well as open, install, maintain, transfer or extinguish branches, dependencies, agencies, main branches, offices, representations or even designate representatives, provided the legal and regulatory provisions.
ARTICLE 2 – Company’s corporate purpose is:
I. study, planning, design, construction and operation of systems of production, transformation, transportation and storage, distribution and commerce of energy, mainly electric, resulting from the use of rivers and other sources, especially renewable ones;
II. study, planning, design, construction and operation of accumulation dams and other enterprises, intended for the multiple use of water;
III. participation in undertakings that have as purpose the industry and the commerce of energy, mainly electric, as well as the provision of services that, directly or indirectly, relates to this object;
IV. study, design, execution of plans and programs for the research and development of new energy sources, especially renewables, either directly or in cooperation with other entities;
V. study, development, execution of economic development plans and programs in regions of interest to the Company, either directly or in collaboration with other state or private bodies, as well as the provision of information and assistance for private or state initiative aimed at implementation of economic, cultural, welfare and social activities in those regions, in order to fulfill its social function for the benefit of the community;
VI. study, design, implementation of afforestation and reforestation of trees, commercialization and industrialization of trees, timber and by-products resulting from these activities;
VII. research, mining, exploration and exploitation of mineral resources, mainly energy; and
VIII. participation in other companies, as partner, shareholder or quotaholder.
ARTICLE 3 – Company’s capital stock, totally subscribed and paid-up, is of five billion, nine hundred and seventy-five million, four hundred and thirty-three thousand, four hundred and fifty-four reais and forty-three cents (R$ 5,975,433,454.43), divided into three hundred and twenty-seven million, five hundred and two thousand, six hundred and seventy-three (327,502,673) shares, of which one hundred and nine million, one hundred and sixty-seven thousand, eight hundred and one (109,167,801 ) are common shares and seven million, three hundred and eighty-six thousand, three hundred and twenty-three (7,386,323) are class A preferred shares and two hundred and ten million, nine hundred and forty-eight thousand, five hundred and forty-nine (210,948,549) are class B preferred shares, all nominative and with no par value.
Sole Paragraph – Irrespective of statutory amendment, the capital stock may be increased up to a maximum limit of seventeen billion, nine hundred and twenty six million, three hundred thousand, three hundred and sixty-three reais and twenty-nine cents (R$ 17,926,300,363.29), by deliberation of the Board of Directors.
ARTICLE 4 – Each common share shall correspond to one vote in the deliberations of the General Meeting, except in the case provided for in the First Paragraph in relation to the election of members of the Board of Directors.
First Paragraph – In any general meeting that proposes to resolve on the election, replacement or dismissal of members of the Company’s Board of Directors, the shareholder or group of shareholders with the same economic interests or bound by a shareholders’ agreement (or voting agreements of any kind) involving the Company, will only may vote jointly on such subject with a maximum number of shares equivalent (i) to sixty percent (60%) of the total voting shares issued by the Company or (ii) to the percentage represented by the total number of shares issued by the Company held by such shareholder or group of shareholders, whichever is less.
Second Paragraph – The restriction on the right to vote set forth in First Paragraph above shall expire on April 30th, 2020, subject to the provisions of the Third Paragraph below.
Third Paragraph – Annually, as of the fiscal year of 2020 (inclusive), but in any case only while a voting restriction is in force under the terms set forth in the First Paragraph above, up to (i) three (3) business days after the annual general meeting or (ii) on April 1st of each year in which a voting restriction is in force, whichever occurs first (“New Restriction Decision Date”), an extraordinary general meeting will be held to resolve, by a majority of the voting shareholders present at such meeting, on the creation of a new period of voting restriction in the exact terms of the First Paragraph above, not exceeding one (1) year (“General Meeting – New Restriction”).
Fourth Paragraph – If, for any reason, General Meeting – New Restriction is not held until the New Restriction Decision Date, the Board of Directors will be obliged to convene, within five (5) days, the General Meeting – New Restriction. In the event that the Board of Directors does not convene the General Meeting – New Restriction, pursuant to this paragraph, any shareholder holding shares representing more than five percent (5%) of the voting capital may call such a meeting directly.
Fifth Paragraph – In the event of Fourth Paragraph above, the voting restriction shall remain in force under the terms of the First Paragraph until the General Meeting – New Restriction is held.
Sixth Paragraph – The preferred shares shall not have voting rights, except as provided in Article 39, but shall be entitled to:
I – Class A preferred shares:
a) priority in the reimbursement of capital, without right to premium in case of liquidation of the Company;
b) non-cumulative annual priority dividend of 10% (ten percent), calculated on the value of the paid-in capital stock represented by class A preferred shares to be equally distributed among these;
c) right to indicate, together with class B preferred shares, a member of the Fiscal Council and respective alternate, chosen by the shareholders, in a separate vote;
d) the right to participate in capital increases, arising from the capitalization of reserves and profits, on equal terms with common shares and class B preferred shares; and
e) shall be unredeemable.
II – Class B preferred shares:
a) the right to receive a value per share corresponding to 100% (one hundred percent) of the amount paid per share to the selling controlling shareholder in the event of sale of the Company’s control;
b) the right to participate on equal terms with the common shares of the distribution of the mandatory dividend attributed to such shares pursuant to these Bylaws;
c) right to indicate, together with class A preferred shares, a member of the Fiscal Council and respective alternate, chosen in a separate vote;
d) the right to participate in capital increases resulting from the capitalization of reserves and profits, under equal conditions with the common shares and Class A preferred shares;
e) they will not have voting rights and will not acquire this right even in the event of non-payment of dividends; and
f) shall be unredeemable.
ARTICLE 5 – Shareholders, subject to the legal provisions and conditions set forth below, may convert (i) class A preferred shares into common shares and class B preferred shares of the Company and (ii) common shares in Class A preferred shares and shares class B preferred shares, in both cases after integrated. The Company’s class B preferred shares are non-convertible.
First Paragraph – In the event of conversion (i) of class A preferred shares into common shares and (ii) common shares in class A preferred shares:
I. the conversions will be carried out in periods to be determined by the Board of Directors, in periods not less than 15 (fifteen) consecutive days;
II. the shareholders must, in order to use the benefit, have enjoyed all the rights related to the shares held and present, at the time of the conversion, the identity documents;
III. in each period of conversion of species, the shareholder may file applications for conversion of up to 3% (three percent) of the capital stock and the amount of the requests formulated may not exceed 5% (five percent) of the capital stock.
Second Paragraph – In the event of conversion (i) of class A preferred shares into class B preferred shares and (ii) common shares into class B preferred shares, the conversion shall be in the proportion of one share held by a new converted share, observing the limit of 2/3 (two thirds) of the total shares issued for non-voting or restricted voting preferred shares.
Third Paragraph – It shall be incumbent upon the Company’s Board of Directors to establish the terms, timing, and conditions for the exercise of the conversion rights set forth in this article, and may perform all acts necessary for its implementation.
Fourth Paragraph – The Company may authorize the depository institution responsible for recording the book-entry shares to be received from the shareholder, subject to the limits established by the Brazilian Securities and Exchange Commission (CVM), the cost of transferring ownership of the registered shares.
ARTICLE 6 – The General Meeting shall be convened, installed and deliberated in accordance with the law, on the matters of its competence.
First Paragraph – It is incumbent upon the Board of Directors, through its Chairman, to convene the General Meeting.
Second Paragraph – The General Meeting will be presided over by the Chairman of the Board of Directors or, in his absence, by other person chosen by the majority of votes of the present shareholders.
Third Paragraph – The chairman of the General Meeting shall choose among those present the secretary.
Fourth Paragraph – The minutes of the General Meeting shall be drawn up in accordance with article 130 of Brazilian Corporate Law.
ARTICLE 7 – The Company will be managed by the Board of Directors and the Executive Board.
Sole Paragraph – The positions of Chairman of the Board of Directors and chief executive officer or main executive officer of the Company may not be accrued by the same person, except in cases of vacancy, in which case the provisions of the Level 1 Regulation shall be observed.
ARTICLE 8 – The Board of Directors is a collegiate deliberation body responsible for the superior guidance of the Company.
Composition and term of office
ARTICLE 9 – The Board of Directors shall be composed of at least three (3) and at most eleven (11) effective members, subject to the provisions of Article 12 below, elected and dismissible at any time by the General Meeting, all with a unified term of office of two (2) years from the date of the election, extending until the successors takes office, with re-election being permitted.
First Paragraph –It shall be responsibility of the General Meeting that elects the Board of Directors to determine the total number of positions to be filled, within the maximum limit set forth in these Bylaws, and to appoint its Chairman and Vice-Chairman.
Second Paragraph – It is the duty of the Chairman of the Board of Directors to call the General Meetings, preside the meetings of the Board of Directors and perform other duties and functions specified or attributed by the internal regulation of the Board of Directors.
Third Paragraph – The Vice-Chairman of the Board of Director shall exercise all the Chairman’s functions in his absence.
Fourth Paragraph – In the event of absence of the Chairman and Vice-Chairman, such duties shall be performed by any other Director appointed by the Chairman.
ARTICLE 10 – It is ensured the participation of one (1) representative of the employees in the Board of Directors, with a mandate coincident with that of the other Directors.
First Paragraph – The Director representing the employees will be chosen by the vote of the employees, in direct election, and is allowed to reapply for non-successive periods.
Second Paragraph – The internal regulations of the Board of Directors may establish eligibility requirements and other conditions for the exercise of the position of employee representative, in addition to the requirements and prohibitions of article 17 of Law 13,303/2016.
Representative of Minority Shareholders
ARTICLE 11 – It is ensured the participation in the Board of Directors of a representative of the minority shareholders, with a mandate coincident with that of the other Directors, pursuant to article 141 of Brazilian Corporate Law.
ARTICLE 12 – The Board of Directors will have the participation of one or more independent members, granting the controlling shareholder the power to elect a majority of its members, pursuant to item “a” of the article 116 of Brazilian Corporate Law.
First Paragraph – The condition of Independent Board Member must be expressly stated in the minutes of the meeting that elects him/her, being that it will not be considered an independent director that one who (i) is a direct or indirect controlling shareholder of the Company; (ii) exercises its voting rights at meetings of the Board of Directors bound by a shareholders’ agreement that has as its subject matters related to the Company; (iii) is a spouse, partner or relative, in a direct or collateral manner, up to the second degree of the controlling shareholder, Company’s director, officer or administrator of the controlling shareholder; and (iv) has been, in the last three (3) years, employee or officer of the Company or its controlling shareholder.
Second Paragraph – Irrespective of the provisions of the First Paragraph above, the member of the Board of Directors elected by separate ballot shall be considered independent for the purposes of the provisions of the caput of this Article 12.
Vacancy and Substitutions
ARTICLE 13 – In the event of vacancy of the position of member of the Board of Directors before the end of the term, the Board of Directors may decide on the choice of the substitute, that will serve interimly until the first General Meeting held after the commencement of the vacancy.
First Paragraph – In the event of vacancy of the majority of the positions of the Board of Directors, a General Meeting shall be called to proceed with a new election, and it shall be incumbent upon the Executive Board to call the General Meeting to elect the Directors in case of vacancy of all the positions of the Board of Directors.
Second Paragraph – In the vacancy of the position of the Director representing the employees, he shall be replaced by another representative, in accordance with the internal regulations of the Board of Directors.
Third Paragraph – For purposes of this article, it is considered vacant the position of member of the Board of Directors resulting from dismissal, resignation, death, invalidity or unjustified absence in four (4) consecutive meetings of the Board of Directors.
ARTICLE 14 – The Board of Directors shall meet ordinarily on a quarterly basis, on a date previously established in an annual calendar defined by the Board of Directors and, extraordinarily, whenever necessary in the interests of the Company, preferably at the Company’s headquarters.
First Paragraph – The meetings of the Board of Directors shall be convened by its Chairman or, in his absence, by the Vice-Chairman, or by the majority of the Board Members, by sending written or electronic correspondence to all Directors with at least ten (10) days in advance, in the event of ordinary and extraordinary meetings, if held in first call, and at least 3 days if the ordinary and extraordinary meetings are held in second call, and the date, time and subjects included in the agenda must be appointed in the notice.
Second Paragraph – The call notice in writing is waived whenever all members of the Board of Directors appear at the meeting.
Third Paragraph – The member of the Board of Directors is allowed to attend the meeting by means of videoconference, conference call or any other means of communication that allows the identification of the participants and their interaction in real time. The Board Member, in such a case, shall be considered present at the meeting, if he/she confirms his/her votes and manifestation by means of a written statement sent to the Chairman of the Board of Directors by letter, “facsimile” or e-mail shortly after the end of the meeting.
Fourth Paragraph – The Board of Directors member may, in his eventual absence, present his/her vote by power of attorney, provided that it is received by the Chairman or Vice-Chairman of the Board of Directors until the beginning of the meeting. If there is a vote to be cast, the power of attorney shall contain the exact content of the vote of the Board Member represented. Otherwise, the attorney-in-fact must abstain from voting, however, the absent Board of Directors member will be considered present for the formation of the quorum of installation and for voting.
Fifth Paragraph – The Chairman of the Board of Directors shall ensure that the Directors receive individually, in advance of the date of the meeting, the documentation containing the information necessary to allow the discussion and deliberation of the matters to be dealt with.
Sixth Paragraph – The meetings of the Board of Directors shall be installed with the attendance of a majority of its members in office, observing the minimum legal and statutory number, presided by the Chairman of the Board of Directors or, in his/her absence, by the Vice-Chairman of the Board of Directors, by another director appointed by the majority of those present, and secretariat by whom the he/she appoints.
Seventh Paragraph – In the event of the temporary absence or impediment of any member of the Board of Directors, it shall continue with the other members, provided that the minimum number of Directors is respected.
Eighth Paragraph – The Chairman of the Board of Directors, on his own initiative or at the request of any Director, may call Company Officers to attend meetings and provide clarification on the matters under consideration.
Ninth Paragraph – The matters submitted to the Board of Directors will be examined with the approved proposal of the Board of Executive Officers or of the Company’s competent bodies, and of legal opinion, when necessary for the examination of the matter.
Tenth Paragraph – When there is a matter of urgency, the Chairman of the Board of Directors, or, in his/her absence, the Vice-Chairman, or the majority of the Directors, pursuant to the First Paragraph of this article, may call extraordinary meetings at any time.
Eleventh Paragraph – The Board of Directors shall resolve by a majority of the votes of those present at the meeting, being that in the event of a tie, the Chairman shall vote on the tie-breaker.
Twelfth Paragraph – The meetings of the Board of Directors must be recorded in minutes drawn-up in a proper book.
Thirteenth Paragraph – Whenever there are deliberations intended to have effects before third parties, the extract of the minutes of the meeting of the Board of Directors shall be filed in the trade register and published.
ARTICLE 15 –The Board of Directors is responsible for the following:
I. establish the general orientation of the Company’s business;
II. supervise the management of the Officers, examine, at any time, the books and papers of the Company, request information on contracts entered into or to be executed, and any other acts;
III. convene the General Meeting when it deems appropriate or in the situations provided for in the legislation and in these Bylaws;
IV. establish, install and dissolve advisory committees not provided for in these Bylaws, electing and removing, at any time, their respective members and establishing the internal regulation of operation;
V. approve the strategic plan containing the updated long-term strategy with analysis of risks and opportunities, the action guidelines, result goals and performance evaluation indices;
VI. approve the business plan for the following annual exercise, annual and multiannual programs, indicating the respective projects;
VII. approve budgets of expenditures and investment, indicating the sources and applications of resources;
VIII. to express its opinion on the management report, the Board of Executive Officers’ accounts and the Company’s financial statements;
IX. approve and review the related party transactions policy, the dividends policy, the securities trading policy, the disclosure policy, the risk management policy, the environmental policy, the social corporate policy, the Class A preferred share conversion policy and the Code of Conduct and Integrity;
X. promote the annual disclosure of the integrated or sustainability report;
XI. approve the energy commercialization policy, including the methodology, the competence and risk limits for the commercialization of energy;
XII. to resolve on the increase of the share capital within the limit authorized by the Bylaws, establishing the respective conditions of subscription and payment;
XIII. to resolve on the issuance, within the authorized capital limit, of shares, debentures convertible into shares and subscription bonus;
XIV. resolve on the issuance, for private placement or through a public offering of distribution, of promissory notes and non-convertible debentures;
XV. to resolve on the granting, within the limit of the authorized capital, and in accordance with a plan approved by the General Meeting, of stock option to administrators or employees, or natural persons that provide services to the Company or the company under its control;
XVI. authorize the trading of the Company with its own shares and with financial instruments referenced in shares issued by the Company and authorize the sale and cancellation of shares in treasury, subject to applicable legislation;
XVII. authorize the Company’s participation in other companies as quotaholder or shareholder, as well as its participation in consortiums and association agreements and/or shareholders’ agreements and on the formation of companies in Brazil or abroad, by the Company;
XVIII. set the Company’s maximum indebtedness limit;
XIX. to resolve on the payment of interest on its own capital or the distribution of dividends based on the net income for the current fiscal year, as determined in interim financial statements, semiannual, quarterly or lesser periods or based on the profit reserves existing in the last annual, interim, semiannual, quarterly or lesser periods financial statements;
XX. deliberate on personnel policy and on the Program for Participation in Profits and Results;
XXI. authorize the execution of any legal business that obligates the Company or exonerate third parties from liability to the Company, whose individual amounts per operation exceed the limit established in the Authority Policy approved by the Board of Directors, subject to the provisions of item XXXIII below;
XXII. authorize the sale or encumbrance of the Company’s real estate, whose amounts exceed the limit established in the Authority Policy approved by the Board of Directors. Exceptions are the cases of exchanges and donations, which must be approved by the Board of Directors regardless of the value;
XXIII. authorize the granting of guarantees in favor of third parties whose individual amounts per transaction exceed the limit established in the Authority Policy approved by the Board of Directors. Excepted are those granted in favor of companies or entities controlled by the Company, alone or jointly, and the guarantees of any nature offered in legal proceedings in which the Company or its subsidiaries are a party, which will not depend on the authorization of the Board of Directors;
XXIV. authorize the conclusion of judicial, extrajudicial, administrative or arbitration agreements that exceed the maximum limits set forth in the Company’s Authority Policy;
XXV. organize its operation, through its own rules embodied in internal regulation approved and modified by the Board of Directors itself;
XXVI. to previously express its opinion regarding any proposal of the Board of Executive Officers or subject to be submitted to the General Meeting;
XXVII. implement and supervise the risk management and internal control systems established for the prevention and mitigation of the main risks to which the Company is exposed, including risks related to the integrity of the accounting and financial information and those related to the occurrence of corruption and fraud;
XXVIII. approve the parameters of the structure of the denunciations channel;
XXIX. approve, upon proposal of the Chief Executive Officer, the responsibilities and duties of the Executive Officers;
XXX. choosing and removing independent auditors;
XXXI. elect and dismiss the members of the Board of Executive Officers and other statutory advisory committees of the Board of Directors;
XXXII. to call and decide on any matter or subject that is not understood in the exclusive competence of the General Meeting; and
XXXIII. authorize the execution of any juristic acts between the Company and its subsidiaries, on the one hand, and any related parties, on the other hand, whose individual amounts per transaction exceed the limit established in the Authority Policy approved by the Board of Directors.
Composition and term of office
ARTICLE 16 – The Board of Executive Officers shall be composed of at least two (2) and, at maximum six (6) members, being a Chief Executive Officer, a Financial Officer, a Investors Relations Officer and the others with no specific designation, being allowed the cumulation of the position of Investors Relations Officer with the position of Chief Executive Officer or with the position of Financial Officer, with the respective duties fixed by the Board of Directors and specified in the Internal Regulation, when in this Statute not specified, all with a unified term of office of 2 (two) years.
Absence, Vacancy and Substitutions
ARTICLE 17 – In the absence or temporary impediment of any Officer, the Chief Executive Officer shall appoint another member of the Board of Executive Officers to complete the functions of the absent or temporarily impeded.
Sole Paragraph – In its absences and temporary impediments, the Chief Executive Officer shall be replaced by the Officer appointed by him.
ARTICLE 18 – In the event of a vacancy, of any Officer position, the Board of Directors shall elect the substitute, who will complete the term of office of the replaced one.
ARTICLE 19 – It is duty of the Chief Executive Officer to:
I. coordinate the activities of the Board of Executive Officers and other Executive Officers;
II. lead, plan, organize, coordinate and supervise Company’s ordinary management, including the implementation of the guidelines and compliance with the resolutions adopted by the General Meeting, by the Board of Directors and by the Board of Executive Officers;
III. to promote the organizational and functional structuring of the Company, in compliance with the provisions of article 15, XXIV, of these Bylaws;
IV. appoint to the Board of Directors the names for the composition of the Board of Executive Officers and recommend to the Board of Directors the dismissal of any member of the Board of Executive Officers; And
V. practice other activities indicated by the Board of Directors.
ARTICLE 20 – Except for the hypotheses provided by law and by these Bylaws, the Company undertakes, by executing binding acts, in court or outside of it, assuming rights and obligations, by the performance, manifestation and signature:
I. of two Executive Officers jointly;
II. of one (1) Executive Officer together with one (1) a attorney-in-fact, according to the expressed powers for the practice of the act contained in the respective power of attorney; or
III. of two (2) attorneys-in-fact, according to the expressed powers contained in the respective power of attorney.
First Paragraph – The power of attorney granted by the Company must always be signed by any two (2) Executive Officers acting jointly, specifying the powers granted and, except for those for judicial purposes, are valid for a maximum of one (1) year.
Second Paragraph – The Investors Relations Officer may individually represent the Company before the CVM, B3, the financial institution providing the Company’s bookkeeping services and organized market entities in which the Company’s securities are admitted to trading.
ARTICLE 21 – The Company will have a Fiscal Council of permanent operation, with the powers and attributions provided by law.
ARTICLE 22 – The Fiscal Council shall be composed of at least three (3) and at most five (5) effective members, and an equal number of alternates, elected annually by the Ordinary General Assembly, being allowed the reelection.
Sole Paragraph – In the event of vacancy or impediment of an effective member of the Fiscal Council, he shall assume the respective alternate.
Representative of Minority Shareholders
ARTICLE 23 – The participation in the Fiscal Council of representatives of the minority shareholders and of the preferred shareholders, if any, and their respective alternates, pursuant to article 161, are guaranteed by the Brazilian Corporate Law.
Sole Paragraph – The controlling shareholder is granted the power to elect a majority of the members of the Fiscal Council, pursuant to item “b” of the fourth paragraph of article 161 of the Brazilian Corporate Law.
ARTICLE 24 – The Company will have a Statutory Audit Committee, a permanent technical support body for the Board of Directors, in addition to those competencies attributed by the regulation in force, under the terms defined in the internal regulation:
I. to refer the choice of the person in charge of the Internal Audit, propose its dismissal to the Board of Directors and supervise the execution of the respective work;
II. to express its opinion on the hiring and dismissal of the independent auditor for the preparation of an independent external audit or any other service and to supervise its activities in order to evaluate its independence, the quality of the services provided and the adequacy of the services provided to the needs of the Company;
III. analyze and monitor the quality and integrity of the Company’s quarterly information, interim financial statements and financial statements;
IV. monitor the quality and integrity of the information and measurements disclosed based on adjusted accounting data and non-accounting data that add elements not foreseen in the structure of the usual reports of the Company’s financial statements;
V. promote the supervision and accountability of the financial area;
VI. ensure that the Board promotes effective internal controls, oversee the Company’s internal control area and monitor the quality and integrity of the Company’s internal control mechanisms;
VII. ensure that the Internal Audit fulfills its role satisfactorily and that the independent auditors evaluate, through its own review, the practices of the Board and Internal Audit;
VIII. ensure compliance with the Code of Conduct and Integrity of the Company;
IX. evaluate the adherence of business practices to the Code of Conduct and Integrity, including the commitment of managers to the dissemination of integrity culture and the valorization of ethical behavior;
X. monitor the procedures to diagnose violation of the Code of Conduct and Integrity, as well as the events registered in the Complaints Channel;
XI. evaluate and monitor the Company’s risk exposures and may require detailed information on procedures and policies related to management compensation, the use of Company assets and expenses incurred on behalf of the Company;
XII. evaluate and monitor, together with management and the internal audit area, the adequacy of transactions with related parties performed by the Company and their respective evidences;
XIII. prepare the summary annual report, to be presented together with the financial statements, containing the following information: (a) the activities performed in the period, the results and conclusions reached, (b) a description of the recommendations presented to the Company’s management, and (c) any situations in which there is significant divergence between the Company’s management, independent auditors and the Statutory Audit Committee in relation to Company’s financial statements;
XIV. prepare the detailed annual report corresponding to the year to which the evaluation refers, and the report shall contain a description of: (a) its activities, results and conclusions reached and recommendations made; (b) any situations in which there is significant divergence between the Company’s management, the independent auditors and the Statutory Audit Committee in relation to the Company’s financial statements.
ARTICLE 25 – The Statutory Audit Committee shall be composed of at least three (3) and at most five (5) members, most of whom are independent pursuant to CVM Instruction No. 30, dated May 14th, 1999, as amended (“ICVM 308/99″), elected and dismissible by the Board of Directors, being that at least one (1) member of the Statutory Audit Committee must be a member of Company’s Board of Directors that don’t participate of the Board of Executive Officers and at least one (1) member must have recognized experience in matters of corporate accounting.
First Paragraph – The members of the Statutory Audit Committee will have a unified term of office of two (2) years, being allowed the reelection for an equal period, since that the three (3) years gap for the reinstatement is observed.
Second Paragraph – The Statutory Audit Committee will be coordinated by a Director.
Third Paragraph – It is prohibited the participation of the Executive Officers of the Company, its subsidiaries, controlling companies, affiliates or company under common control, directly or indirectly, in the Statutory Audit Committee.
ARTICLE 26 – The Statutory Audit Committee shall have operational autonomy and its own budget approved by the Board of Directors, pursuant to the law.
ARTICLE 27 – The Statutory Audit Committee exercises its functions in accordance with its internal regulation. In addition to the provisions of these Bylaws and the internal regulation of the Statutory Audit Committee, the committee shall comply with all terms, requirements, attributions and composition set forth in ICVM 308/99, qualifying itself as a Statutory Audit Committee (CAE) under the terms therein provided.
ARTICLE 28 – The members of statutory bodies must prove compliance with legal requirements, by presenting curriculum and a statement signed by the individual elected pursuant to article 2 of CVM Instruction No. 367, dated May 29th, 2002.
First Paragraph – It is unelectable for the positions of Company’s management and Fiscal Council the person impeded by special law, or convicted for bankruptcy crime, malfeasance, bribery, graft, embezzlement or crime against the popular economy, public faith or property, or the criminal penalty that prevents, even temporarily, access to public positions.
Second Paragraph – It is also unelectable for the positions of Company’s Fiscal Council the person convicted to suspension or temporary disablement penalty applied by the CVM.
ARTICLE 29 – The members of the statutory bodies will be invested in their positions by signing an instrument of investiture drawn up in the respective book of protocols.
First Paragraph – The term of office must be signed within 30 (thirty) days after the election, under penalty of its ineffectiveness, unless justified by the body to which the member has been elected, and must contain at least one domicile to receive citations and subpoenas of administrative and judicial proceedings, related to acts of its management, and being allowed to change the address indicated only by written communication.
Second Paragraph – The qualification of the members of the Board of Directors and of the Board of Executive Officers shall be conditional upon the prior subscription of the Statement of Consent of the Managers in accordance with the provisions of the Level 1 Regulation, as well as compliance with applicable legal requirements.
ARTICLE 30 – Except in the event of resignation or dismissal, the term of office of the members of statutory bodies shall be automatically extended until the respective substitutes are in office.
ARTICLE 31 – The global compensation of the members of statutory bodies shall be fixed by the General Meeting.
First Paragraph – The compensation of the members of the committees shall be fixed by the General Meeting.
Second Paragraph – It is a duty of the Board of Directors to resolve on the distribution of the global compensation of the managers among the members of the Board of Directors and of the Board of Executive Officers.
Third Paragraph – The General Meeting that elects the Fiscal Council shall determine the compensation of the counsels, which, in addition to the compulsory reimbursement of travel and accommodation expenses necessary for the performance of the function, may not be less than ten percent (10%) for each member in office. per cent) of the compensation that, on average, is attributed to each officer, not including benefits, representation fees and profit sharing.
ARTICLE 32 – The fiscal year will coincide with the calendar year, after which the Board of Executive Officers will prepare the financial statements provided for by law.
Sole Paragraph – The disclosure of the financial statements shall occur no later than four (4) months after the end of the respective fiscal year.
ARTICLE 33 – Profit for the fiscal year, after deductions provided by the Brazilian Corporate Law, will have the following destination:
I. five percent (5%) shall be applied, before any other destination, in the constitution of the legal reserve, up to the limit of twenty percent (20%) of the capital stock;
II. of the balance, will be assigned amount for payment of the priority dividend of class A preferred shares, provided for in Article 4, item I, letter b;
III. of the balance, the amount to be paid for the mandatory annual dividend to the common shares and class B preferred shares, corresponding to ten percent (10%) of the paid-in capital stock represented by these shares, to be apportioned equally among them;
IV. of the balance, up to twenty percent (20%) may be allocated as per resolution of the General Assembly, to reinvest in the expansion of the activities set forth in Article 2 of this by-law, up to ten percent (10%) of the capital stock;
V. the balance will be allocated deliberately at the General Assembly, subject to the retentions permitted by law, and in case of distribution of the remaining balance to the common and preferred shares class A and class B, this will be done under equal conditions.
Sole Paragraph – The payment of interest as remuneration of equity may be deducted from the amount of dividends payable, in accordance with current legislation.
ARTICLE 34 – The common shares will be entitled to the minimum mandatory dividend corresponding to twenty-five percent (25%) of the net income for the year, after deductions determined or admitted by law.
First Paragraph – Class A preferred shares shall be entitled to the annual non-cumulative priority dividend of ten percent (10%), calculated on the value of the paid-in capital stock represented by class A preferred shares to be equally distributed among them.
Second Paragraph – Class B preferred shares shall be entitled to participate on equal terms with the common shares in the distribution of the mandatory dividend pursuant to the caput of this Article.
Third Paragraph – The mandatory dividend may be paid by the Company in the form of interest on capital.
Fourth Paragraph – The Company may issue interim or intercalary balance sheets for the purpose of dividend distribution or payment of interest on shareholders’ equity.
ARTICLE 35 – The Company will be liquidated in the cases provided for by law, and the General Assembly, if applicable, shall determine the method of liquidation and appoint the liquidator, establishing its remuneration.
ARTICLE 36 – The Company must comply with any and all provisions set forth in shareholders’ agreements that may be filed at its headquarters.
Sole Paragraph – The Company shall not register, consent or ratify any vote or approval of the shareholders, board of directors or any officer, or perform or do not perform any act that violates or is incompatible with the provisions of such shareholders’ agreements or that, in any way, could jeopardize the rights of shareholders under such agreements.
ARTICLE 37 – The Company, its shareholders, administrators and members of the Fiscal Council undertake to resolve, through arbitration, before the Market Arbitration Chamber of B3 , in accordance with its respective Arbitration Rules , any and all disputes or controversies that may arise between them, related to or arising in particular from the application, validity, effectiveness, interpretation, violation and its effects, of the provisions contained in Brazilian Corporate Law, in these Bylaws, in the rules issued by the National Monetary Council, by the Central Bank of Brazil and by the CVM, as well as in other rules applicable to the operation of the capital market in general, in addition to those set forth in the Regulations of the Level 1 of Corporate Governance Practices of B3 S.A. – Brasil, Bolsa, Balcão, the Arbitration Rules of the Market Arbitration Chamber and in the Contract of Adoption of Differentiated Practices of Corporate Governance Level 1.
ARTICLE 38 – The Company is a member of Level 1 and may only withdraw from Level 1 in order to the Company’s shares to be registered for trading outside Level 1 or due to a corporate reorganization in which the resulting company does not have its securities admitted to trading on Level 1 within one hundred and twenty (120) days as of the date of the general meeting that approved the transaction, through (i) prior approval at a General Meeting and (ii) communication to B3 in writing in advance of thirty (30) days.
ARTICLE 39 – The provisions contained in (A) article 12, (B) in Article 37 and (C) in this article of this Bylaws may only be amended by a favorable vote of more than half of total capital stock of the Company or to incorporate any changes to the B3 Regulations for differentiated levels of corporate governance.
ARTICLE 40 – The amount of reimbursement due to dissenting shareholders exercising the right of withdrawal in the cases provided for in the Brazilian Corporate Law is determined by dividing the value of shareholders’ equity, as determined in the last individual financial statements approved by the General Meeting, by the total number of shares issued by the Company, disregarding treasury shares.