EBITDA represents net income (loss), before financial result, income and social contribution taxes, depreciation, amortization, expenses with Stock Option Plan and non-operating results. EBITDA should not be considered as an alternative to net income (loss), as an indicator of Renner operating performance, or as an alternative to cash flow as an indicator of liquidity. The Company’s management believes that EBITDA provides a useful measure of its performance that is widely used by investors and analysts to evaluate Renner performance and compare it with other companies in same industry. In making such comparisons, however, you should bear in mind that EBITDA is not a recognized measure under U.S. Accounting Principles (US GAAP) or Brazilian Accounting Principles (BR GAAP) and that it may be defined and calculated differently by different companies.
In 2000, the Bovespa introduced three special listing segments, known as Level 1 and 2 of Differentiated Corporate Governance Practices and the New Market (Novo Mercado), aiming at fostering a secondary market for securities issued by Brazilian companies with securities listed on the Bovespa, by prompting such companies to follow good practices of corporate governance. The listing segments were designed for the trading of shares issued by companies voluntarily undertaking to abide by corporate governance practices and disclosure requirements in addition to those already imposed by Brazilian law. These rules generally increase shareholders’ rights and enhance the quality of information provided to shareholders.
The Novo Mercado is the listing segment that provides the greatest protection to a listed company’s shareholders. To become a company within Novo Mercado, Renner agreed, among other things, to:
issue voting shares only;
ensure that shares representing 25% of its total capital are effectively available for trading;
ensure that the same conditions provided to controlling shareholders in the transfer of its company’s control are extended to all shareholders (i.e., tag-along rights);adopt offering procedures that favor widespread ownership of shares whenever making a public offering;
establish a one-year term of office for the entire board of directors, composed at least of 5 members;
comply with minimum quarterly disclosure standards and improvements in quarterly financial statements, including quarterly consolidated financial statements and limited audit revision;
make its annual balance sheet available according to U.S. GAAP or IFRS GAAP in the second fiscal year after listing on the Novo Mercado;
make a schedule of corporate events available to the shareholders;
if Renner ever decide to delist from Novo Mercado, conduct a tender offer based on economic valuation criteria; and
accept the Bovespa arbitration panel for conflict resolution between investors, management and Novo Mercado companies.
Renner shares are held in registered book-entry form, using the book-entry form services of Banco ItaúS.A., as custodian. Transfer of the Company shares is carried out by means of an entry in their books, by debiting the share account of the transferor and crediting the share account of the transferee.
Transfer of shares by a foreign investor are made in the same way and executed by the investor’s local agent on the investor’s behalf except that, if the original investment was registered with the Central Bank pursuant to foreign investment regulations, the foreign investor should also seek amendment, if necessary, through its local agent, of the Certificate of Registration to reflect the new ownership.
The São Paulo Stock Exchange operates a central and fungible clearing system through the CBLC. A holder of its shares may choose, at its discretion, to participate in these systems and all shares elected to be put into the systems will be deposited in custody with the relevant stock exchange (through a Brazilian institution that is duly authorized to operate by the Central Bank and maintains a clearing account with the relevant stock exchange). The fact that such shares are subject to custody with the relevant stock exchange will be reflected in Renner registry of shareholders. Each participating shareholder will, in turn, be registered in Renner register of beneficial shareholders that is maintained by the relevant stock exchange and will be treated in the same way as registered shareholders.
Custodian Bank: Banco Itaú S.A.
Av. Engº Armando de Arruda Pereira, 707, 10º andar
04344-902 - São Paulo - SP - Brazil
Phone: (5511) 5029-7780
Fax: (5511) 5029-1917
Remark: Service to shareholders is rendered by bank’s branches network
There are no restrictions on ownership of Renner shares by individuals or legal entities domiciled outside Brazil. However, the right to convert dividend payments and proceeds from the sale of common shares into foreign currency and to remit such amounts outside Brazil is subject to exchange control restrictions and foreign investment legislation.
Foreign investors must either register their investment as a direct foreign investment before the Central Bank of Brazil under Law 4,131/62, or as a foreign investment in portfolio before the CVM under Resolution # 2,689 and CVM Instruction # 325.
Foreign investors with direct foreign investments registered under Law 4,131/62 may divest through private transactions or transactions conducted through the stock exchange or over-the-counter market and are generally subject to less favorable tax treatment as compared to foreign investors with portfolio investments pursuant to Resolution # 2,689 and CVM Instruction # 325.
Under Resolution # 2,689, foreign investors with portfolio investments registered with the CVM may only buy and sell shares on the Brazilian stock exchange or on the over-the-counter market, except in certain cases, such as the acquisition of shares in public offerings. Investors under these regulations are also generally entitled to favorable tax treatment.
At Renner shareholders‘ meetings, each share of common stock is generally empowered with one vote. Pursuant to the Company’s bylaws and its Bovespa listing agreement in connection with the listing of Renner shares on the Novo Mercado, the Company cannot issue shares without voting rights or with restricted voting rights. In addition, Renner bylaws and Brazilian Corporation Law provide that holders of its shares are entitled to dividends or other distributions made in respect of its shares ratably in accordance with their respective participation in the total amount of Renner issued and outstanding shares.
In addition, upon the Company’s liquidation, holders of Renner shares are entitled to share its remaining assets, after payment of all of its liabilities, ratably in accordance with their respective participation in the total amount of Renner issued and outstanding shares. Holders of Renner shares are not obligated to subscribe to future capital increases and are generally entitled to preemptive rights to subscribe for new shares as provided by Brazilian Corporation Law.
According to Brazilian Corporation Law, neither Renner bylaws nor actions taken at a shareholders‘ meeting may deprive a shareholder of the following rights:
the right to participate in the distribution of profits;
the right to participate equally and ratably in any remaining residual assets in the event of liquidation of the Company;
preemptive rights in the event of issuance of shares, convertible debentures or warrants, except in some specific circumstances under Brazilian law;
the right to inspect Renner management in accordance with the provisions of the Brazilian Corporation Law; and
the right to withdraw from the Company in the cases specified in Brazilian Corporation Law.
All Renner’s material facts, earnings results and other notices to the market are published simultaneously at CVM/Bovespa and at the investor relations area of the Company’s website (http://www.lojasrenner.com.br), and sent later by email to persons registered to receive this information. To receive information by e-mail please register here.
Complete financial statements are published annually by the newspapers “Valor Econômico (National Edition)”, the Official Gazette of the Rio Grande do Sul and the “Jornal do Comércio (Porto Alegre)”. Quarterly financial statements, press releases, presentations, material facts and notices to shareholders are available in the investor relations area of Renner’s website (http://www.lojasrenner.com.br). Other information about the Company also may be obtained on the website of São Paulo Stock Exchange (www.bovespa.com.br) and at the Securities and Exchange Commission of Brazil - CVM (www.cvm.gov.br).
Renner’s shares are listed on the Novo Mercado (New Market) of the Bovespa (Bolsa de Valores de São Paulo) under the symbol “LREN3”
Yes. Renner bylaws contain provisions to avoid the concentration of its shares in the hands of a small group of investors so as to promote widespread ownership of its shares. These provisions require each shareholder (except for existing shareholders who already hold 20% or more of its shares, including the Company’s controlling shareholder and its partners and successors that acquire direct participation in Renner as a result of corporate reorganizations, and other investors who become its shareholders in certain transactions specified in its bylaws) that becomes the holder of 20% or more of Renner total capital stock (excluding treasury shares and involuntary capital increases as specified in its bylaws), to make a public tender offer in accordance with CVM regulations, within 60 days of the acquisition of such holding, offering to buy all of Renner outstanding shares at a price per share at least equal to the higher of (1) the Company’s market value, calculated based on a valuation, (2) 120% of the issue price of its shares in any capital increase that takes place within the preceding 24 months from the date the public tender offer becomes mandatory, adjusted until the payment date based on the Consumer Price Index (± Índice Nacional de Preços ao Consumidor Amplo, or IPCA), published by IBGE, and (3) 120% of the average trading price of Renner shares on the stock exchange on which its shares are most often traded, calculated during the 90 day period prior to the public tender offer.
If, as a result of this offering, any investor becomes the holder of 20% or more of its total capital stock, such investor must make the public tender offer mentioned above. There are no restrictions in this offering regarding the acquisition of 20% or more of Renner total capital stock by any investor.
The provision of the Company’s bylaws that requires an investor that becomes the holder of 20% or more of Renner total capital stock to effect a public tender offer for its shares, may only be eliminated or amended to restrict such rights at a shareholders‘ meeting, with the approval of the majority of shareholders present. For purposes of this approval, each shareholder will be entitled to one vote, regardless of the number of shares actually held by such shareholder. In this event, the shareholders that approve the amendment or elimination of this provision of Renner bylaws must then make a public tender offer for its shares in accordance with the proper rules.
Yes. While Renner shares trade on the Novo Mercado, any person who acquires shareholding control of the Company will be required to make a tender offer within 90 days of such acquisition for all of the remaining publicly traded shares at a price per common share equivalent to not less than the price paid per share by such person for the controlling stake.