Corporate Governance

In 2000, B3 introduced three trading segments with different levels of corporate governance practices, called Level 1, Level 2 and Novo Mercado, designed to encourage companies to follow best corporate governance practices and disclose more information than what is required by law. The listing segments were designed for the trading of shares issued by companies that voluntarily agree to follow corporate governance practices and meet disclosure requirements that exceed those imposed by Brazilian law. These rules generally increase shareholders’ rights and enhance the quality of information provided to shareholders.

Novo Mercado is the most rigorous listing segment, requiring the most stringent corporate governance practices. The rules imposed by Novo Mercado aim to provide the market with transparency on the companies’ activities and economic situation, as well as greater powers for minority shareholders to participate in the management of the companies, among other rights. The Company opted to adopt the highest levels of Corporate Governance when joining this segment.

Brazilian Code of Corporate Governance coordinated by the Brazilian 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 the relationships between shareholders, board of directors, 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. By the principle of transparency, it is understood that management must cultivate the desire to inform not only the company’s economic and financial performance, but also all other factors (even if intangible) that guide corporate action. Equity means the fair and equal treatment of all minority groups, employees, customers, suppliers or creditors. Accountability, in turn, is characterized by the rendering of accounts of the performance of the corporate governance agents to those who elected them, with full responsibility of those for all the acts they practice. Finally, corporate responsibility represents a broader view of business strategy, with the incorporation of social and environmental considerations in the definition of business and operations. Among the corporate governance practices recommended by IBGC in its Brazilian Corporate Governance Code, the Company adopts the following:

• Capital stock composed only of common shares, providing voting rights to all shareholders;

• Obligation to carry out a public offer for the acquisition of shares when transactions occur that involve the sale of share control to all partners and not only to the holders of the control block. All shareholders must have the option to sell their shares at the same price and under the same conditions. The transfer of control must be done at a transparent price;

• No accumulation of the position of chief executive officer and chairman of the board of directors;

• Adoption of risk management policy, code of ethics and conduct and securities trading policy;

• Definition of an annual calendar with a forecast of thematic annual agenda with relevant subjects and dates of discussion, including the dates of regular meetings;

• Use of the general shareholders’ meeting to communicate the conduct of the company’s business, with the minutes allowing full understanding of the discussions held at the meeting and identifying the votes cast by the shareholders.