Codes and Policies
Click here to download Code of Ethics (PDF).
I – PURPOSE
The purpose of this Code of Ethics is to formalize the commitment to act with honesty and integrity, promote ethical and responsible decision making, as well as establish a pattern of behavior that shall be followed by all Company Board members, Executive Officers, employees and contractors.
The Code seeks to encourage a constructive relationship with the Company’s stakeholders, increasing the level of trust and transparency in internal and external relationships, encourage the identification and communication of inappropriate behavior, emphasize our commitment to investigate reported incidents and protect persons who, in good faith, report unacceptable conduct, while preserving the company’s image and reputation.
II – SCOPE
This Code of Ethics applies equally to the members of the Board of Directors, Fiscal Council and Committees, executive officers, employees, contractors and those who are, directly or indirectly, related to the Company.
Everyone shall be aware of the Code’s content when engaging with the Company, sign the term of commitment and ensure that their actions are aligned with the Code’s principles and values.
III – GUIDELINES
The Company is committed to generate sustainable and long-term value. We believe that the best way to achieve this goal is to behave with honesty and integrity and have all Board members, executive officers, employees and contractors promote ethical and responsible decision making. By consistently having such a behavior, we aim to build sustainable and valuable relationships with our clients, employees, contractors, suppliers, regulatory bodies, government authorities and the community.
Internal relationships and synergies
It is everyone’s duty to ensure continuous improvement of service quality and commit to better results. All professional activities shall be in line with the Company’s strategic objectives and be performed with determination, dedication and diligence.
Everyone who contributes to and participates in the Company’s result is responsible for the preservation, maintenance, image and reputation of the Company; therefore, everyone is directly, jointly and severally responsible for the Company’s success.
The Company recognizes that its success depends on the level of satisfaction of its employees. Therefore, criticisms and/or suggestions to improve work processes and relationships within the professional environment are always welcome. The exchange of ideas and experiences among co-workers, regardless of hierarchical position, can benefit everyone.
Professional relations shall always be cordial and cooperative. Competence shall prevail over competition in all professional activities.
Relationship with shareholders
Management must act with transparency and responsibility, dedicate and prioritize the generation of value to the business, so that its shareholders have adequate return on their capital in the long term.
All information that is mandatory or not, which is of interest to shareholders, must always be communicated in a transparent way through the Company’s information channel, no favors involved.
The Finance and Investor Relations Officer is exclusively responsible for the relationship with shareholders and potential investors. Management members and all other Company employees must ensure confidentiality of material information not yet disclosed to the public and ensure that subordinated persons and trusted parties also keep confidentiality, pursuant to the guidelines established in the Information Disclosure Policy/Information Security.
The trading of shares or any securities issued by the Company and related party transactions must be carried out according to the terms and conditions of the Securities Trading Policy and the Related Party Policy.
Oppressive practices of coercion for forced or compulsory labor, abuse of power, in the form of moral or sexual harassment to gain sexual advantage or favor, or abusive conduct that may harm the physical or psychological dignity and integrity of a person, due to the hierarchy of the position held, are prohibited.
Any type of disqualification by means of jokes, insults or vexatious situations, disrespect, persecution through threats, disguised persecution or persecution due to the position of power held, sexual harassment through unwanted declarations or spoken and non-spoken statements in a sensual manner, are also forms of harassment.
All persons must be treated with respect and dignity, aiming at a harassment-free work environment. Everyone must behave in such a manner that is not offensive, intimidating, malicious or humiliating.
Health, safety and environment
Employees’ health and physical integrity, and protection of the environment are a priority for the Company and are above any economic and production matters. Everyone must strictly comply with health, safety and environmental procedures and practices.
Everyone is committed to promoting sustainable development, education, environmental and social awareness, ensuring the protection, preservation and quality of the environment and the work environment for present and future generations.
As part of this commitment, the Company protects the environment and acts to preserve damages, waste disposal and waste of natural resources, requiring strict compliance with environmental laws and procedures to preserve the environment when contracting services. It also encourages initiatives and/or participation in programs that aim to establish the culture of preserving natural resources and respecting the environment.
Regarding safety, everyone must always be aware of and ensure their own health and physical integrity, as well as the health and integrity of coworkers. It is extremely important that everyone becomes responsible for preventing accidents in the work environment. By taking care of the physical integrity of our premises and technical equipment, we also avoid possible risks of accidents.
Everyone, with no exception, is responsible for health and safety in the work environment and must comply with the laws and internal regulations related to Occupational Health and Safety, thereby ensuring healthy work environment and quality of life. Everyone must ensure that they are always wearing the necessary personal protective equipment and are aware of the necessary attitudes to be taken in case of an emergency. Any work that may contribute to a community environment incident or accident, with actual or potential significant impact, must be discontinued.
Use of alcohol, drugs, firearms license, sale of goods and inappropriate content
It is expressly forbidden to be under influence or use alcohol while exercising a professional activity.
The use and possession of drugs in the Company’s premises is strictly prohibited. Staying in the workplace under the influence of these substances is also prohibited as it may affect everyone’s safety and performance in the Company. Weapons of any kind are not allowed in the Company’s premises, unless if carried by professionals expressly authorized to do so.
The sale and exchange of goods of private interest in the Company’s premises, as well as the exchange, storage or use of obscene, pornographic, violent, discriminatory, racist or defamatory content that disrespects any individual or entity, is prohibited.
Confidentiality of information, insider and strategic information
Everyone is responsible for the Company’s insider and strategic information. Information not disclosed to the market or information whose leakage may generate personal gain is considered insider information, and include financial results, acquisition or sale, industrial secret, investments and related matters.
The Company seeks to comply with Data and Privacy Laws, protect personal and confidential information, including information on clients, suppliers, business partners and employees.
Only personal information that is necessary for legitimate activities and duties may be collected, used and retained. Everyone must protect and make proper use of information about clients, suppliers and business partners. In some cases, the use of said information may violate Brazilian and international laws and regulations. The use of insider information for one’s own benefit or for the benefit of third parties, as well as disclosure of personal or insider information is illegal and unethical.
Employees must prevent anyone from accessing said information and must be extra careful with documents and printed materials left on tables or in drawers and cabinets.
Conflict of interest
It is expressly prohibited to offer or receive any type of advantage that may constitute an attempt to obtain or grant favors to third parties interested in maintaining a business relationship with the Company.
Everyone must prevent or report situations considered to be a conflict of interest, such as practicing acts to benefit private interests rather than the interests of the Company, or which may cause damages or losses to the Company, and must report any circumstance, suspicion or fact impeding their participation in individual or in collegiate body, pursuant to the Related Party Policy.
Relationship with suppliers
The Company must ensure that all contracted participants receive equal treatment by adopting transparent and objective procedures in order to obtain the best technical and economic result.
Suppliers must be chosen on concrete and neutral basis, with no favoritism. By means of an appropriate instrument, suppliers and providers of goods and services will be required to adopt the same ethical and moral standards provided for hereto.
The Company requires all suppliers, partners and third parties to comply with the law in effect, especially anti-corruption, environment and decent work laws, denying any type of child or forced labor.
It is a violation of the contracting process, subject to civil, administrative and criminal penalties, the Company’s internal regulations and this Code, any attempt to:
a) Disclose any information received from suppliers to third parties, breach the confidentiality of prices/budget prior to the formal stage of selection of suppliers;
b) Manipulate data, influence suppliers or any act that may affect transparent competition between suppliers;
c) Prevent from or defraud any act or activity related to the contracting process;
d) Favor suppliers or benefit from the contracting process, create, in a fraudulent or irregular manner, a legal entity in order to participate in the competition and contracting process;
e) Exclude or inhibit the participation of suppliers in the competition process by means of fraud or by offering any type of advantage;
f ) Manipulate or defraud the economic-financial balance of contracts.
Relationship with trading partners
Trading partners are an essential part of the Company’s operations and any misconduct carried out by them negatively impacts the Company’s image and reputation and exposes it to potential civil or criminal liability.
For this reason, partner companies must always comply with this Code when conducting their business with or on behalf of the Company. Everyone conducting business with third parties must ensure that they are aware of and act in line with the guidelines set forth herein, as well as with the Company’s internal policies.
All contractors are considered commercial partners, directly or indirectly. This includes agents, brokers, intermediaries, advisors, consultants, representatives, travel agents, forwarding agents, customs or visa agents, tax consultants, lawyers, proxies, accountants and lobbyists (persons and companies carrying out, within the law and Ethics, activities organized by a group of defined and legitimate interests, in order to be heard by public authorities).
Relationship with competitors and antitrust law
The Company prohibits any attitude that may not allow trade or free competition, especially illegal practices of formation of cartels, bid rigging or abuse of power.
The Company is fully committed to complying with competition laws and is willing to cooperate with competition authorities when necessary, as well as to continuously monitor third parties that may act in disagreement with said regulations.
All previous alignment with competitors must be confirmed with the Compliance and Legal areas. One of the main concerns of the Compliance area is the freedom of competition.
Everyone is responsible for being attentive to the guidelines of this document regarding interactions and behaviors before situations of competition.
Relationship with the community
The Company ensures trusting relationships with its stakeholders and assures its economic feasibility and compliance with its social duties before the community.
These relations must be carried out with respect, seeking the balance between stakeholders’ interests and the interests of the Company, its shareholders, employees and the society in general.
Relationship with the government
The Company’s activities and its relationship with Public Authorities, in all levels and jurisdictions, are governed by constitutional principles, the law in effect and this document.
The Company respects the criteria imposed by the law in effect and any legal determination arising thereto. Therefore, the Legal Area must be consulted whenever there are any doubts regarding legislation matters.
We must always comply with the laws, rules and regulations wherever we may be. The principles of legality, impersonality, morality, publicity, efficiency, motivation and honesty must always guide the conduct of the Company’s business, and all employees must apply them.
Relationships with the Government must aim at honesty, precision and transparency, always with the presence of two or more persons, and, when necessary, with the presence of a professional from the legal area.
Political relationship, donations and sponsorships
As defined by the Company, sponsorship is the financial contribution or inclusion of its brand in initiatives that contribute to building its institutional image. All sponsorships, as well as the benefits received, must be submitted for approval by the Board of Executive Officers.
The Company makes no contributions to political parties or political campaigns of candidates for elected positions but respects the employee’s right to engage in matters and participate in political process. However, said participation shall occur in the employee’s free time and at his/her own expense.
Any donation of goods or services shall be approved by the Company’s Board of Executive Officers, pursuant to the law applicable and the limits set forth in the Bylaws.
Gifts, entertainment and hospitality
It is prohibited to accept and offer gifts, benefits or advantages from and to third parties, offered or received due to one’s position, which may include an expectation of return.
It is allowed to receive gifts of no commercial value, as courtesy, due to special or disclosure events, or on the occasion of historical or cultural events, such as: pens, diaries, t-shirts with the company’s logo and others.
Check the Compliance Area for any questions about receiving and giving gifts.
The Company respects and recognizes the work performed by media professionals to provide clarification to the population and protect the common interest.
It is the Company’s duty to maintain open and permanent dialogue with the media, but only employees authorized by the Information Disclosure Policy/Company’s Spokespersons/Information Security are authorized to speak on its behalf.
Employees are not allowed to disclose to external parties any documents, data or information internally used by the Company of which they have knowledge, possession or control, without due compliance with the internal procedures established or without formal and express authorization of the competent internal authorities.
The Company is committed to disclose its version of facts publicly disclosed under its name or responsibility and which, directly or indirectly, may affect its reputation, image or the legitimate interests of its shareholders.
Image and reputation
The Company’s image and reputation are its main assets and, therefore, everyone must be ethical and reasonable, both in the professional environment and outside it, always acting in accordance with the principles and values set forth in this Code.
The Company’s assets, equipment and premises shall be exclusively used in its operations and cannot be used for private purposes, except in specific situations defined by the Company. This includes all physical and intangible properties, such as facilities, inventory, information technology (IT) and intellectual property, as well as Company data and information.
Everyone must protect the Company’s assets and use them for the intended purposes.
Everyone must be aware of and take precautions regarding robbery, misappropriation, damage and misuse of any Company asset. It is prohibited to destroy, dispose of, sell, borrow or donate without proper approvals.
Intellectual property is a strategic asset for the Company. Intellectual property comprises trademarks, patents, industrial design, domain names, copyright, innovations, improvements, processes or products, projects or models, financial, commercial or market information, ideas, knowledge or any other non-material activity developed in the Company, among other items that would benefit a competitor should they be aware of it.
The result of intellectual work and strategic information generated in the Company is the exclusive property of CESP. Everyone must keep confidentiality about information on intellectual property accessed due to their work and use it carefully.
This information may not be disclosed by our employees or commercial partners who, due to their activities, have had access to said information without express authorization of the Company’s management.
All employees must consider the existence of intellectual property rights when using information/software/data and ensure the protection of information in general, as well as not accept any insider information from third parties or use them without permission.
Information security shall be treated with attention. The inappropriate use of IT systems is prohibited and can expose us to a number of risks, including virus attacks and breach of information security.
The use of software (interface programs in electronic devices) or hardware (electronic physical equipment) without legally constituted license of use (such as pirate versions) is prohibited. It is expressly prohibited to install, copy, sell or distribute software and its manuals.
Electronic systems and IT resources are available to employees so that they can properly perform their duties. They may be used for personal purposes only in compliance with internal rules and guidelines and on the condition that this does not jeopardize the employees’ work.
The Company declares to be vehemently against acts or practices that connive with fraud and corruption. Everyone must be familiar with and apply the rules defined in the Anti-Corruption Law, as well as report any questionable conduct of which they become aware using the available channels.
Corruption is the intention or willingness to act dishonestly, unethically and in disagreement with the law in exchange for any personal advantage or gain. Corruption harms society and causes damages in several levels, such as political, economic and social.
Therefore, according to the Company’s values and principles, the persons addressed to in this Code are prohibited to:
a) Offer or give money, regardless of the value, or any other type of advantage, to supplier, market participant, investor or any person or public or private entity with which the Company has a relationship;
b) Accept, suggest, solicit and receive goods, gratuities, commissions, payments and financial aid, under any circumstances;
c) Plead, solicit, provoke, suggest, receive or offer any type of financial aid, gratuity, award, commission, donation or any type of advantage, to themselves, family members or any person, to carry out business activities or to influence others for the same purpose.
During the development of professional activities and business relations, the Company does not allow practices aimed at money laundering or concealment of assets, concealment of the assets’ origin, transaction of values, transfer or receipt of ownership of movable or immovable properties, directly or indirectly, arising from illegal acts.
In case of any violation of this Code of Ethics, a compliance must be filed in the Ethics Hotline. Anyone can access the Ethics Hotline by telephone or via the portal to make complaints, ask questions or follow-up on a complaint already made.
You can make an anonymous complaint. Anonymity will be maintained for an undetermined period.
The Ethics Hotline is aimed at receiving internal and external complaints related to non-compliance with this Code, internal rules, and practices of corruption, fraud and irregularities that jeopardize the Company’s assets, reputation and image.
The Ethics Hotline is impartial and transparent, ensures information confidentiality, preserves the identity of the persons involved and provides a better environment for everyone. It allows clarifying doubts of interpretation and sending complaints regarding non-compliance with the Code of Conduct.
The Ethics Hotline is independent and impartial, and all cases are duly recorded, classified according to the nature of the complaint, and analyzed. All complaints made by means of the Ethics Hotline channels are automatically sent to a qualified and independent external entity that will classify them and send them to the Conduct Committee, which is responsible for analyzing and recommending the respective corrective measures.
Complaints related to fraud and bribery in business acts or transactions involving employees, suppliers and business partners shall be accompanied with concrete facts and data, whenever possible.
The Company does not admit acts of retaliation, such as threats, poor assessment, harassment, suspension and dismissal, among others, against a person who, in good faith, reports or declares being suspicious about potential violations of this Code. This type of conduct must be immediately reported and, should its occurrence be in fact verified, disciplinary measures will be applied to the retaliation agent.
The Company must disclose and encourage the use of the Ethics Hotline to its internal and external public.
CESP’s Ethics Hotline
Telephone (24/7 free calls)
0800 591 1609
In order to disseminate the Code of Conduct, oversee the application of disciplinary measures and ensure ethical culture in all of our businesses, the Company has a Conduct Committee comprised of persons prepared to deal with matters related to potential misconduct and integrity issues in general, namely: the Chief Executive Officer and persons responsible for the Legal, Compliance and Human Resources areas, in addition to other persons, as necessary.
All the complaints received by the Ethics Hotline are sent to the Conduct Committee, which is responsible for adopting the measures necessary to remedy the violations and ensure that they be applied, updating and periodically reviewing the Code of Conduct, making administrative decisions in more severe cases of violation, making recommendations on situations of potential conflict of interest between the related parties and ensuring that the Ethics Hotline will remain as a permanent and direct
communication channel with the Conduct Committee.
The Committee is responsible for sending matters involving members of the Board of Executive Officers to the Board of Directors, thus ensuring independence during the entire process.
Violation of the Code
The failure to comply with the Code is a misconduct that may lead to disciplinary measures. Non-compliance with the Company’s standards and rules are not tolerated and may be subject to penalties. In case of violation of the Code, the nature of any disciplinary or corrective measure shall be determined by the Conduct Committee, as well as by consultations with experts, including the Legal, Compliance and Human Resources departments.
Corrective measures will depend on the severity of the violation or other material circumstances. It is important to clarify that cases of violation involving breach of the law will be submitted to competent police authorities.
The purpose of the disciplinary measures is to establish rules to guarantee the required behavior standards. They shall be applied in all situations in which a behavior disagrees with these standards. The application of disciplinary measures will depend on the severity of the violation and other material circumstances and may include:
1. Verbal or written warning.
3. Dismissal with or without cause.
Cases of application of consequence management provide a basis for the Conduct Committee to take similar measures in similar cases.
IV – APPROVAL AND VALIDITY
CESP’s Code of Ethics shall be approved at a Meeting of the Board of Directors and will be valid for two (2) years. It may be amended at any time, provided that said amendment is approved by the Board of Directors.
Click here to download Trading and Disclosure Policy (PDF).
The main purpose of this Securities Trading and Information Disclosure Policy (“Policy”) is to establish guidelines and procedures related to the use and disclosure of information within the scope of CESP – Companhia Energética de São Paulo and its Subsidiaries (“CESP” or “Company”), as well as procedures related to the maintenance of confidentiality of undisclosed information and trading of Company securities.
This Policy covers CESP and all of its areas and shall be mandatorily complied with by:
(i) the Company;
(ii) the Controlling Shareholder;
(iii) executive officers, members of the Board of Directors and Fiscal Council, Committee members and members of any other bodies with technical or advisory duties created by statutory provision;
(iv) Company employees and third parties hired by the Company;
(v) other persons deemed by the Company, at its discretion, as significant for the purposes of this Policy, including those who have had access to said information and securities due to the position held in the Company (and who are not included in the previous items), or due to commercial and professional relationship, as well as relationship of trust with the Company.
- Law 6,404, of December 15, 1976, as amended (“Brazilian Corporate Law”)
- Company’s Code of Ethics
- Company’s Bylaws
- Instruction 358 of the Brazilian Securities and Exchange Commission (“CVM”), of January 3, 2002, as amended (“ICVM 358”)
- CVM Instruction 480, of December 7, 2009, as amended (“ICVM 480”)
- Law 6,385, of December 7, 1976, as amended
- Other laws, standards, regulations and accounting pronouncements effective on the approval date of this Policy
When used in this Policy, the following capitalized terms, in their singular or plural form, shall have the meaning set forth below:
Controlling Shareholder – the shareholder or shareholder group exercising the Company’s control.
Managers– the Company’s statutory executive officers and members of the Board of Directors.
Material Act or Fact – pursuant to Brazilian Corporate Law and ICVM 358, any decision of a Controlling Shareholder, resolution of the General Meeting or bodies of the Company’s management, any other political-administrative, technical, business or economic-financial act or fact occurred or related to the Company’s businesses that may have significant influence:
(i) on the prices of Securities; and/or
(ii) on investors’ decision to buy, sell or hold the Company’s Securities; and/or
(iii) on investors’ decision to exercise any rights inherent to their condition as holders of Securities.
If doubt arises about whether an event is a Material Act or Fact, the Company must refer to the examples listed in article 2, sole paragraph of
Stock Exchange – B3 S.A. – Brasil, Bolsa, Balcão, or any other stock exchange or organized trading markets in which the Company has securities admitted to trading in Brazil or abroad.
Insider Information – significant information not yet disclosed to the public.
Subject Persons – the persons described in Item 2 of this Policy.
Related Persons – regarding legal entities, their direct and indirect Controlling Shareholders, Executive Officers, Members of the Board of Directors, Fiscal Council and any other bodies with technical or advisory duties created by statutory provision, as well as employees and third parties, subsidiaries, parent companies, affiliates or companies under common control, or their respective shareholders or holders of membership interests with significant interest in the share capital. Regarding individuals, the spouses, partners, ascendants and descendants up to the third degree, by consanguinity or affinity, either a direct or collateral relative, such as father, mother, grandparents, uncles and aunts.
Control – refers to the power effectively used to manage the Company’s activities and guide the operations of its bodies, either directly or indirectly, regardless of the ownership interest held.
Agreement to Comply – the formal instrument signed by the Subject Persons, notarized and filed by the Company, in which the signatories declare that they are aware of the rules of this Policy, pursuant to Exhibit I hereto.
Securities – the shares, debentures, subscription warrants, receipts and subscription rights, promissory notes issued by the Company, certificate of deposit of said securities, futures contracts and referenced derivatives, or any other bonds or collective investment agreement issued by the Company, convertible or exchangeable into securities issued by the Company or referenced or backed by them.
5.1. DISCLOSURE OF INFORMATION
(i) Purpose. The purpose of the disclosure of a Material Act or Fac is to ensure the Company’s investors the availability, in a timely manner, efficiently and reasonably, of information necessary for their investment decisions, assuring the best possible information symmetry, thus avoiding undue use of insider information in the securities market by persons who have access to it for their own benefit or for the benefit of third parties, to the detriment of investors in general, the market and
(ii) Responsibilities. The Investor Relations Officer is responsible for disclosing a Material Act or Fact. Accordingly, the Subject Persons shall immediately inform to the Investor Relations Officer about any Material Act or Fact that they become aware of, so he/she may inform the CVM and the Stock Exchange, as applicable, pursuant to the rules disclosed by them, as well as simultaneously disclose them to the market, as per this Policy.
(iii) Forms of Disclosure. The disclosure of a Material Act or Fact involving the Company shall first:
(a) be sent to the CVM’s and Stock Exchange’s periodic and eventual information system, on the Internet;
(b) be disclosed in the news portal available on the website of the Valor Econômico newspaper (http://www.valor.com.br/fatosrelevantes); and
(c) be disclosed on the Company’s website (http://ri.cesp.com.br/).
Any interactions with class organizations, investors, analysts, the press or selected public, in Brazil or abroad, related to the matter that may constitute a Material Act or Fact, shall be attended by the Chief Executive Officer or Investor Relations Officer, or any other person appointed by them for such purpose. Otherwise, the content of the matter that may constitute a Material Act or Fact shall be previously reported to the Investor Relations Officer, so that any Material Act or Fact is simultaneously disclosed to the market, as per this Policy.
Should the disclosure of a Material Act or Fact occurs during trading hours, the Company must contact the Stock Exchange’s Board of Issuers, prior to the disclosure of a Material Act or Fact, so that the trading of securities is suspended, pursuant to the Stock Exchange’s Issuer Manual.
(iv) Exception to Disclosure. As a general rule, a Material Act of Fact must be immediately informed and disclosed. In any case, the failure to inform and disclose a Material Act or Fact is an exception that must be analyzed should it impair the legitimate interest of the Company, the Controlling Shareholders or the Company’s Managers, as applicable. Even if the Managers or Controlling Shareholders decide not to disclose a Material Act or Fact, they must immediately disclose said Material
Act or Fact, directly or by means of the Investor Relations Officer, if the information cannot be controlled or in the event of atypical variation in the quotation, price or number of securities traded. The Controlling Shareholders or Managers may exceptionally submit to the CVM their decision to maintain confidential Material Acts or Facts whose disclosure is deemed to impair the legitimate interest of the Company.
(v) Confidentiality. The Subject Persons must keep undisclosed material information confidential, to which they have access because of their position, until said information is informed to the public. They must also ensure that Related Persons keep said information confidential.
(vi) Disclosure on Trading. The executive officers, members of the Board of Directors, Fiscal Council or any bodies with technical or advisory functions created by a statutory provision must inform to the Company about the ownership and trading with securities issued by the Company, on their behalf or on behalf of Related Persons, as well as changes to these positions. This communication shall include the information of Exhibit II hereto, be sent to the Investor Relations Officer
immediately after his/her taking office, within five (5) days after carrying out each transaction and when there are changes in the positions held. The Investor Relations Officer, in turn, shall send to the CVM and the Stock Exchange the information described above within ten (10) days after the end of the month. The Controlling Shareholders, the shareholders who elect the members of the Board of Directors or
Fiscal Council, any Person Subject to this Policy and Related Persons, acting jointly or representing a single interest, shall inform to the Investor Relations Officer about the acquisition or disposal of significant equity interest, immediately after said interest is acquired or disposed of, directly or indirectly, corresponding to five percent (5%), ten percent (10%), fifteen percent (15%) and so on, pursuant to the form template in Exhibit III hereto. The Investor Relations Officer, in turn, shall send to the CVM and the Stock Exchange the aforementioned communication.
In cases in which the aforementioned acquisition results or has been carried out to change the composition of the Company’s control or administrative structure, as well as in cases in which the acquisition requires that a public offering be carried out, pursuant to the applicable law, the acquirer shall also disclose, at least through the same means of communication adopted by the Company, a notice containing the information above (including in Exhibit III).
5.2. TRADING SECURITIES
(i) Purpose. All trading of Securities carried out by Subject Persons must strictly comply with the terms and conditions of this Policy. The purpose of this Policy is to restrain and punish the use of Insider Information when trading in securities and set forth the guidelines that will govern, in an orderly manner and within the limits established by law, the trading with said Securities by Subject Persons, pursuant to ICVM 358 and any other internal Company policies. These rules also seek to restrain insider trading (undue use of Insider Information for their own benefit or for the benefit of third parties) and tipping (Insider Information tips that benefit third parties), preserving transparency when trading in Securities.
It should also be noted that the restrictions to this Policy do not apply to negotiations carried out by investment funds in which the Subject Persons are holders of membership interest, provided that they are not exclusive investment funds or investment funds whose administrator’s or portfolio manager’s trading decisions are influenced by the Subject Persons or by Related Persons.
(ii) Lock-up periods. The Company shall establish periods in which trading is prohibited. During said periods, the Subject Persons will be prohibited from trading Securities. The Subject Persons shall also keep the lock-up period confidential. Therefore, pursuant to the law in effect, Subject Persons are prohibited to trade Securities:
(a) before the disclosure of a Material Act or Fact to the market that they are aware of;
(b) fifteen (15) days prior to the disclosure of the Company’s interim financial information (ITR) and annual financial statements (DFP); said terms may be extended, at the Company’s discretion;
(c) when they become aware of the Company’s intention to carry out a merger, total or partial spin-off, consolidation, conversion or corporate reorganization;
(d) in the case of Managers, when they withdraw from positions in the Company’s Management prior to the disclosure of Material Acts or Facts arising during their management, up to: (i) the end of the six-month (6) term as from their withdrawal; or (ii) the disclosure of said Material Acts or Facts to the public.
In addition to the prohibitions above, the Company’s Investor Relations Officer may, at any time, establish extraordinary lock-up periods, during which the Subject Persons will be prohibited from trading in Securities. When this is the case, the Subject Persons will receive a message notifying the enforcement of the extraordinary lock-up period, which shall be extended until another notification cancels said prohibition. The enforcement of an extraordinary lock-up period is confidential information that shall not be disclosed by anyone receiving said notification.
The Investor Relations Officer may reduce, suspend, cancel or extend
any lock-up period of Company shares or other securities according to specific circumstances and whenever necessary. Anyone affected by said prohibitions shall be duly notified. In any case, please note the possibility provided by article 15-A of ICVM 358 regarding the formalization of individual investment plans regulating the trading in with Company shares, as per the provisions of ICVM 358 and as approved
by the Company.
The prohibition to trade Company shares or securities does not apply to the acquisition of Securities held in treasury by means of private negotiation, arising from the exercise of the purchase option under the securities or stock option plan approved at a general meeting, or in the case of granting shares or Securities or in case of share-based plan to Managers, employees or service providers as part of compensation, as previously approved at a general meeting.
In addition, whenever a process to acquire or sell Company shares is in progress, or in case of celebration of agreement or contract to transfer the Company’s shareholding control, or if an option or mandate was granted for the same purposes, or if there is the intention of carrying out a merger, total or partial spin-off, consolidation, conversion or corporate reorganization, the Subject Persons will be prohibited from trading in Securities.
(iii) Short Selling. Subject Persons shall not trade Securities representing any speculative transactions, including short selling, transactions based on price changes and short-term volatility of these Securities, call or put options or related options, among others.
In order to ensure appropriate standards for trading in Company Securities and compliance with the rules established in this Policy, all trading of Securities carried out by the Company or Subject Persons shall be maintained for at least ninety (90) days.
(iv) Agreement to Comply. All Subject Persons and other persons that the Company deems as necessary must sign the Agreement to Comply attesting that they are aware of the rules of this Policy. The signed Agreement to Comply must remain filed at the Company’s headquarters for at least five (5) years after the end of the relationship between the signatories and the Company.
Whenever there is any change in registration data, the subscriber of the Agreement to Comply must immediately notify said change to the Company, so it may make the necessary updates.
(v) Stock Loan. The prohibitions to trade Securities, as provided for in this Policy, apply to Securities lending operations carried out by the Subject Persons as lenders (donors); the Subject Persons are prohibited from lending Securities when they are borrowers.
The Subject Persons must comply with the guidelines set forth hereto and, in the event of any situation that may be considered violation, they must notify the Investor Relations Office, who shall take appropriate measures. Remaining questions shall also be sent to the Investor Relations Office prior to trading in Securities.
The Subject Persons shall be liable for the acts carried out by third parties, whenever they act under the guidance or authorization of the Subject Persons. Notwithstanding, the provisions of this Policy do not eliminate the responsibility, arising from legal and regulatory requirements, attributed to third parties not directly related to the Company and who are aware of any Material Act or Fact and trade with Securities.
The Investor Relations Office is responsible for enforcing and monitoring this Policy and other provisions of the applicable law, including, but not limited to: (i) issuing an alert regarding the lock-up period in the cases provided for in law and this Policy; (ii) disclosing individual and consolidated trading and shareholding reports, as required by ICVM 358; and (iii) disclosing notices to the market regarding significant trading, as provided for in ICVM 358.
The Investor Relations Office, supported by the Internal Audit and Compliance Area, shall define specific procedures for employees to formalize the confirmation that they are aware of the content of this Policy by signing the Agreement to Comply.
In addition, the Investor Relations Office may request, at any time, the shareholding position of its employees.
7. IMPACTS ARISING FROM NON-COMPLIANCE WITH THE DEFINITIONS OF THIS POLICY
The failure of the Subject Persons to comply with this Policy and/or Bylaws implies administrative, civil and criminal liability, as applicable, and/or any other applicable penalties. Violations of this Policy shall be treated based on the Company’s Code of Ethics, submitted to the Investor Relations Office and the Internal Audit and Compliance Area, which, without prejudice to any penalties provided for in the applicable law and regulation, shall report the fact to the manager of the persons involved so that applicable internal penalties are applied.
8. APPROVAL AND VALIDITY OF THE POLICY
This Policy was approved at the Company’s Board of Directors’ Meeting of May 13, 2019 and became effective on the same date, canceling and replacing any other previous policies and guidelines on the matter, both verbal and written.
This Policy may only be amended, revised or revoked by new resolution and approval by the Company’s Board of Directors.
The Policy will be widely disclosed internally by the Company and made available to shareholders, investors and the market in general on the Company’s Investor Relations website (http://ri.cesp.com.br/).
Click here to download Policy for Related Party Transactions (PDF).
The main purpose of this Related Party Transaction Policy (“Policy”) is to establish the guidelines and procedures to carry out transactions between Related Parties and Companhia Energética de São Paulo (CESP) and its Subsidiaries (“CESP” or “Company”), as well as transactions involving situations with potential conflicts of interest, ensuring equal, ethical and transparent treatment, contracting under market conditions and in accordance with the best corporate governance practices, always aiming at the Company’s interests.
This Corporate Policy applies to CESP and its Related Parties.
3. REFERENCES / APPLICABLE DOCUMENTS
- Law 6,404, of December 15, 1976, as amended (“Brazilian Corporate Law”)
- Technical Pronouncement CPC 05 issued by the Technical Pronouncements Committee, approved by Resolution 642 of the Brazilian Securities and Exchange Commission of October 7, 2010 (“CVM” and “CVM Resolution 642”, respectively)
- Technical Pronouncement CPC 18 issued by the Technical Pronouncements Committee, approved by CVM Resolution 696 of December 13, 2012
- Technical Pronouncement CPC 36 issued by the Technical Pronouncements
Committee, approved by CVM Resolution 698 of December 20, 2012
- CVM Instruction 480, of December 7, 2009, as amended (“ICVM 480”)
- Company’s Code of Ethics
- Company’s Bylaws
- Company’s Authority Levels Policy
- Other laws, rules, regulations and accounting pronouncements in effect on the approval date of this Policy
When used in this Policy, the following capitalized terms, in their singular or plural form, shall have the meaning set forth below:
Managers – the statutory executive officers and members of the Board of Directors of an entity.
Conflict of Interest – when a person or entity is not independent in relation to the matter under discussion and can influence and/or guide results and/or make decisions motivated by personal interests or interests different from those of the Company, in order to benefit oneself, any Close Family Member or third party to whom said person or entity is related, or is in a situation that may interfere with their ability to make a fair judgement, even if said relationship is not deemed as a
Related Party Transaction.
Market Conditions – negotiations that consider prices, terms, conditions, assumptions, duties and obligations usually agreed upon between clients and suppliers in the market.
Control – the power to influence an entity’s financial and operating policies in order to benefit from its social activities and instructions on the operation of the entity’s bodies, pursuant to Brazilian Corporate Law.
Affiliate – the entity over which investors have significant influence.
Parent Company – an entity that controls one or more subsidiaries.
Subsidiary – the entity controlled by another entity.
Economic Group – the parent company(ies) and all of its (their) subsidiaries
Significant Influence – the power to participate in the operating and financial decisions of an entity, but that does not characterize control over these decisions. Significant Influence may be obtained by means of equity ownership, statutory provisions or shareholders’ agreement.
Close Family Members – family members that may have influence or be influenced by said person, regarding the businesses conducted between these members and CESP, namely:
a) their spouse or partner;
(b) their children or the children of their spouse or partner; and
(c) their dependents or the dependents of their spouse or partner. Related Party(ies) – the person or entity related to CESP, as follows:
(a) a person, or Close Family Member, is related to CESP if any of the conditions below are met:
(i) have the full or shared Control of CESP;
(ii) have Significant Influence over CESP; or
(iii) is a Key Personnel of CESP or CESP’s Parent Company.
(b) an entity is related to CESP when:
(i) it is part of CESP’s Economic Group;
(ii) if CESP is under the common Control of a third entity or person;
(iii) it is under the joint Control of a third entity and CESP is an Affiliate of this third entity;
(iv) it is an Affiliate or Joint Venture of CESP or an Affiliate or Joint Venture of an entity that is a member of CESP’s Economic Group;
(v) it is a full or jointly-owned Subsidiary of any person referred to in item (a) above;
(vi) it has, by mean of a person identified in item (a) (i) above, Significant Influence over CESP or Significant Influence as its Manager or as a Key Personnel of CESP or its Parent Company; or
(vii) it is a post-employment benefit plan whose beneficiaries
are the Company’s employees or any entity related to it.
Related Party Transaction – the transfer of resources, goods, services or obligations between CESP and a Related Party, irrespective of whether a price is charged in return, such as:
- Acquisition or sale of goods (finished or not);
- Acquisition or sale of properties and other assets;
- Rendering or receiving services;
- Transfer of research and development;
- Transfer through license agreements;
- Financial transfers (including borrowings and capital contributions in cash or equivalent);
- Granting guarantee, accommodation or suretyship;
- Settlement of liabilities on behalf of the entity or by the entity on behalf of the related party.
The exceptions to Related Party Transactions are as follows:
(i) any payments made by the Company related to compliance with obligations previously approved by the respective management bodies, pursuant to applicable statutory provisions;
(ii) the early payment by the Company of remuneration of any kind, including, without limitation, bonuses, profit sharing, share-based compensation programs to the Management, Key Personnel and Company employees; and
(iii) transactions carried out between the Company and companies that, directly or indirectly, hold 100% of the capital stock (wholly-owned subsidiaries), as well as transactions carried out between said wholly-owned subsidiaries.
Key Personnel – persons with authority and responsibility for planning, managing and controlling the entity’s activities, directly or indirectly, including any entity Manager. In the case of the Company, the Key Personnel are its statutory or non-statutory executive officers, general managers and managers.
5.1. GENERAL ASPECTS
Related Party Transactions shall be carried out under the principles, ethical values and transparency, including in conducting negotiations, aiming at the exclusive interests of the Company, pursuant to the guidelines established in the Code of Ethics.
Related Party Transactions and other transactions involving potential Conflicts of Interest shall be identified, analyzed and monitored according to the terms set forth in this Policy.
Information related to Third Party Transactions shall be fair, reflect the actual transaction and, where applicable, be continuously recorded in an information system, separated from routine or administrative transactions, pursuant to the applicable guidelines and approvals; all accounting entries shall be periodically recognized, accounted for and disclosed in a precise manner and according to the accounting principles accepted by law.
The management and monitoring of Related Party Transactions shall be periodically audited by internal or external auditors, in order to check the alignment of the activities performed with the guidelines and expectations defined in this policy, in the applicable documents and laws in effect.
As soon as transactions classified as Related Party Transactions or transactions that involve Conflict of Interest are identified, a notice shall be sent to the statutory Board of Executive Officers and Internal Audit and Compliance Area in writing (email) and regardless of value, with description of the following information:
(i) name of the Related Parties;
(ii) type of relationship of the Related Parties with CESP;
(iii) date of the potential transaction;
(iv) purpose of the transaction;
(v) amount involved in the transaction;
(vi) amount corresponding to the interest of said Related Party in the transaction, should it be possible to measure;
(vii) related guarantees and insurances;
(viii) duration of the purpose of the transaction;
(ix) conditions to the termination of the transaction; and
(x) main obligations and other terms and conditions of the transaction.
The prior analysis of the statutory Board of Executive Officers and Internal Audit and Compliance Area will be submitted to the Board of Directors, which shall previously authorize the signature of the Related Party Transaction, as defined in the Bylaws and the Authority Levels Policy, pursuant to the following criteria:
- Market Conditions, also considering equal conditions, transparency in the negotiation process, independence and compliance with the Company’s interests;
- Documentary evidence that it is an arm’s length transaction, so that said transactions and the entire decision-making process preceding them must be documented in order to allow further verification, when necessary. It is important to obtain (depending on the type of transaction): (i) documents proving the supplier’s know-how; (ii) prices and quotations with competitors of the Related Party or appropriate price rationale, among others;
- When the Board of Directors deems applicable, the opinion of one or more independent third parties may be asked regarding the adequacy, equal treatment and any benefits to the Company when contracting said transaction; and
- Adherence to the current regulations governing the operationalization of the transactions, accounting procedures and respective disclosures.
When situations related to decision-making involving Related Parties, Related Party Transactions or situations of Conflict of Interests are identified, CESP’s Managers and/or shareholders, as applicable, shall immediately take a position on the matter, taking the appropriate measures, such as not voting and/or intervening in the decision-making of other participants. In this case, the Related Party Transaction or potential Conflict of Interest shall be approved by a majority vote, excluding the votes of CESP’s Managers and/or shareholders who are a Related Party and/or a party involved in the Conflict of Interest.
In cases in which the Related Party Transaction does not involve a Conflict of Interest, where the transaction aims explicitly at benefiting the Company, such as the sharing of resources, licenses, systems and services, the majority of the Board of Directors shall agree on how the voting will be conducted and, upon their decision, all Board members may vote on said transaction. All resolutions shall be formally recorded in the minutes. The following transactions are prohibited:
- When they do not meet Market Conditions;
- When they are carried out on behalf of the Company and favor particular interests of the Related Parties, or one of its subsidiaries or other companies that may violate CESP’s interests; and
- When they are carried out without prior analysis and approval under the Authority Levels Policy or when they do not comply with the Code of Ethics, the laws in effect and this Policy.
All Related Party Transactions and their respective disclosures and decisions shall be monitored by the Statutory Audit Committee, together with the Managers and the Internal Audit and Compliance Area, as defined in the Company’s Bylaws. In this regard, the Internal Audit and Compliance Area shall inform the Statutory Audit Committee, on a quarterly basis, about all Related Party Transactions carried out in the period.
The Company must disclose Related Party Transactions, even if said transactions have not yet occurred, in accordance with article 247 of Brazilian Corporate Law, CVM Resolution 642 and ICVM 480.
The disclosure of Related Party Transactions shall be clear, correct, complete and concise, in Management’s annual report, reference form, notes to the financial statements and notice on Related Party Transactions, in accordance with applicable rules, respecting the condition to provide sufficient details to identify the Related Parties and essential conditions inherent to the above-mentioned transactions/matters, among which (i) date, (ii) detailed description of the subject matter of the agreement, (iii) motivation, (iv) contracting parties, (v) relationship between the contracting parties, (vi) time line of the negotiation and decision, (vii) price, terms and conditions, including any consideration, (viii) valuation methodology, (ix) benefits obtained or expected by the Company; (x) benefits obtained or expected by the related party, including subsidiaries and family members, and (xi) reasons why Management deems the transaction to be on an arm’s length basis or to provide for appropriate compensatory payment, in order to offer shareholders the right to oversight and monitor the Company’s management acts, without prejudice to the duty of promoting wide disclosure to the market when the transaction is deemed as a material fact or upon disclosure of the financial statements.
Also, pursuant to ICVM 480, CESP shall electronically send a notice on Related Party Transactions to the CVM, on its website, up to 7 business days as of the occurrence of said transaction, regarding:
(a) Related Party Transaction or group of related transactions, whose amount exceeds the lowest of:
(i) R$50,000,000.00; or
(ii) 1% of CESP’s total assets.
(b) At Management’s discretion, the Related Party Transaction or group of related transactions whose total amount is lower than the parameters set forth in item (a) above, considering:
(i) the characteristics of the transaction;
(ii) the nature of the relationship between the Related Party and CESP; or
(iii) the nature and extension of the Related Party’s interest in the transaction.
Notwithstanding the above, regarding any approval of a Related Party Transaction, CESP’s Management shall analyze whether it should disclose a material fact, pursuant to article 2 of CVM Instruction 358 of January 3, 2002, as amended, when it understand that the execution of said agreement may significantly influence:
(i) the prices of securities issued by CESP or referenced thereto;
(ii) investors’ decision to buy, sell or hold CESP’s securities; and/or
(iii) investors’ decision to exercise any rights inherent to their condition as holders of securities issued by CESP or referenced thereto.
CESP’s Managers, members of the Statutory Audit Committee and the Internal Audit and Compliance Area are responsible for:
- Ensuring that all Related Party Transactions be carried out under the principles and ethical values set forth in the Code of Ethics, this Policy and the laws in effect governing the matter;
- Ensuring that Related Party Transactions be traded independently, transparently and under conditions equal to those effective in the market and/or practiced with third parties;
- Pointing out alternatives to the proposed Related Party Transaction available in the market;
- Submitting to discussion and approval all related party transactions prior to their implementation;
- Acting in accordance with the Company’s interest;
- Declaring in a timely and formal manner their Conflict of Interest, when they are not independent regarding the transaction or matter under discussion, or whenever they have conditions to influence or make decisions motivated by interests different from those of the Company; and
- Monitoring and disclosing transactions carried out by the Company.
7. IMPACTS ARISING FROM NON-COMPLIANCE
The failure of CESP’s Managers, Key Personnel, employees, Board members and Committees members (statutory or not) of complying with this Policy and/or Bylaws implies administrative, civil and criminal liability, as applicable, and/or any other applicable penalties. Violations of this Policy shall be submitted to the Internal Audit and Compliance Area which, without prejudice to any penalties provided in the law and applicable regulations, shall report the fact to the Investor Relations Officer and the manager of the parties involved, who shall apply the applicable internal penalties, as well as the penalties provided for in the Code of Ethics.
8. APPROVAL AND VALIDITY OF THE POLICY
This Policy was approved at the Company’s Board of Directors’ Meeting of May 13, 2019 and became effective on the same date, canceling and replacing any other previous policies and guidelines on the matter, both verbal and written.
This Policy may only be amended, revised or revoked by new resolution of and approval by the Company’s Board of Directors. The Statutory Audit Committee may recommend to CESP’s Management any improvement to this Policy.
The Policy will be widely disclosed internally by the Company and will be made available to shareholders, investors and the market in general on the Company’s Investor Relations website (http://ri.cesp.com.br/).