Corporate Governance

Overview

Corporate governance is the system by which businesses are directed and controlled, comprising the relationship between shareholders, directors, officers, independent auditors and the supervisory board.

The BM&FBOVESPA shares are traded at "Novo Mercado" - the  special listing segment created by the Stock Exchange (BOVESPA) for the trading of shares issued by companies voluntarily undertaking to abide by corporate governance practices and disclosure requirements which exceed those already imposed by Brazilian law.

To become a participating company in the Novo Mercado segment an issuer must, among other things, agree to:

• issue only voting shares;

• grant tag-along rights for all shareholders in connection with a transfer of control of the company, offering to the holders of shares the same price paid per share for controlling block shares;

• ensure that shares of the issuer representing 25% of its total capital are effectively available for trading;

• adopt offering procedures that favor widespread ownership of shares whenever making a public offering;

• comply with minimum quarterly disclosure standards;

• disclose, on a monthly basis, all transactions made by controlling shareholders involving securities issued by the company, including derivatives;

• make a schedule of corporate events available to the shareholders;

• establish a two-year term of office for all members of the board of directors, with the possibility of reelection. Under exceptional circumstances and for transition purposes, in the event that the company is under a dispersed control, the members of the board of directors may be elected for a term of up to three years;

• have a Board of Directors comprised of at least five members, 20% of whom must be independent;

• make annual financial statements, including cash flow statements, available in English in accordance with international accounting standards such as the US GAAP or the IFRS, beginning on the second fiscal year after the shares have been admitted for listing on the Novo Mercado segment;

• submit to arbitration all controversies and disputes involving the company and members of its management and supervisory board, whenever appointed, relating to the application, validity, efficacy, interpretation, violation or effect of the Novo Mercado membership agreement and listing rules, the company’s bylaws, Brazilian Corporate Law, the rules issued by the Brazilian National Monetary Council (CMN), the Central Bank of Brazil and the Brazilian Securities and Exchange Commission (CVM), as well as the rules of BOVESPA’s Market Arbitration Chamber, and any other rules applicable to the capital markets in general;

• hold public meetings with analysts and any other interested parties at least once a year, in order to disclose information about the company’s economic and financial situation, plans and prospects; and

• if it elects to delist from the Novo Mercado segment, or as a result of a corporate restructuring whose resulting company is not admitted to be traded on the Novo Mercado segment, effect a tender offer by the company’s controlling shareholder to purchase the outstanding shares at least for their fair economic value, as evaluated by a specialized valuation firm in an appraisal report.