Corporate Governance Practices, the Brazilian and the Institute of Corporate Governance ("IBGC‘‘)

According to the Brazilian Institute of Corporate Governance (IBGC), corporate governance is the system by which companies are managed and monitored, involving relations between shareholders, Board of Directors, Board of Executive Officers, independent auditors and Fiscal Council. The basic principles that guide this practice are: (i) transparency; (ii) equity; (iii) accountability; and (iv) corporate responsibility.

Transparency means that Management should not only cultivate the desire to inform not only the Company’s financial performance but also all other facts (even if intangible) that guide corporate activities. Equity means the fair and equitable treatment of all minority groups, employees, clients, suppliers or creditors. Accountability is characterized by the provision of information about the performance of corporate governance agents to those who elected them, with full responsibility for all their acts. Lastly, corporate responsibility represents a broader vision of the corporate strategy, with the incorporation of social and environmental considerations in the definition of the companies’ businesses and operations.

Novo Mercado

In 2000, the BM&FBOVESPA introduced three special listing segments, known as Level 1, Level 2 and the Novo Mercado, aimed at fostering a secondary market for securities issued by Brazilian companies with securities listed on the BM&FBOVESPA by prompting such companies to follow good corporate governance practices.

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 applicable Brazilian law.

These rules generally increase shareholders’ rights and enhance the quality of information provided to shareholders. To become a Novo Mercado company, in addition to the obligations imposed by applicable law, the issuer must agree to: (i) issue only common shares; (ii) ensure that shares of the issuer representing at least 25.0% of its total capital are effectively available for trading; (iii) comply with maximum quarterly disclosure standards; (iv) follow stricter disclosure policies with respect to transactions made by controlling shareholders, members of its board of directors and its executive officers involving securities issued by the issuer. To be listed in the Novo Mercado, an issuer must meet all of the requirements for Level 1 and Level 2 companies.

Arbitration Clause

Pursuant to our Bylaws, the Company, its shareholders, management and members of the Fiscal Council hereby undertake to resolve by means of arbitration, pursuant to the Market Arbitration Panel Rules, any and every dispute or controversy that may arise among them, related to or deriving from, and specially due to the application, validity, effectiveness, construal, infringement and its effects of the provisions in our Bylaws, in the shareholders’ agreements filed at the Company‘s headquarters and in the provisions of the Brazilian Corporation Law, before the Market Arbitration Chamber of the BM&FBOVESPA S.A. - Securities, Commodities and Futures Exchange (“Chamber”), pursuant to the set of rules that regulate the operations of the Chamber.

Without prejudice to the validity of the arbitration clause, any of the parties to the arbitration proceedings shall be entitled to resort to the law courts, if and whenever necessary, for the purpose of seeking preliminary injunctions to protect their rights, in arbitration proceedings already under way or to be filed, and as soon as any measure of this nature is granted, the authority to decide on the merits shall immediately return to the Court of Arbitration established or to be established.

Last Update on November 29, 2011

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