In 2000, Brazil’s B3 stock exchange rolled out three trading segments featuring different levels of corporate governance practices: Level I, Level II and New Market. The purpose is to encourage companies to follow better corporate governance practices and to adopt a reporting level in addition to that required by law. These listing segments are intended for the trading of shares issued by companies voluntarily committed to adopting corporate governance practices and reporting requirements other than those provided in the Brazilian laws. These rules add to the rights of shareholders and improve the quality of the information provided to them.
New Market is the most stringent segment, requiring the highest level of corporate governance practices of all three. The New Market rules are intended to give transparency to the companies’ activities and economic position, and greater influence in their management to minority shareholders, and other rights. By listing its shares in this segment, the Company chose to adopt greater levels of Corporate Governance.
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. It involves the relationships between shareholders, the board of directors, executive officers, independent auditors and the audit committee. The basic principles that govern this practice are (i) transparency; (ii) equity; (iii) accountability; and (iv) corporate responsibility. The transparency principle is about ensuring that the management may maintain a desire to report not only the company’s economic and financial performance, but all other factors — including intangible ones — guiding its actions. Equity is about addressing all minority groups, employees, clients, suppliers or creditors in a fair and egalitarian manner. Accountability, in turn, holds the corporate governance agents accountable to those who elected them, taking full responsibility for their actions. Finally, corporate responsibility represents a broader view of the company’s strategy and includes social and environmental concerns in the definition of businesses and operations. The Company adopts the following corporate governance practices recommended by IBGC under the Brazilian Code of Corporate Governance:
- Capital stock solely consisting of common shares, which provide voting rights to all shareholders;
- Mandatory tender of shares for all shareholders, and not only those in the controlling group, amid any sale of controlling interest. Each shareholder shall be entitled to sell his or her share for the same price and in the same conditions. Transfer of control must be effected at a transparent price;
- The positions of chief executive officer and chairperson must be held by different individuals;
- Adoption of a risk management policy, code of ethics and conduct, and securities trading policy;
- Annual calendar with an annual agenda including relevant topics and dates for discussion, including the dates of annual meetings;
- In the general shareholders’ meeting, the status of the company’s businesses is reported and the meeting minutes clearly describe the discussions raised at the meeting, and detail the votes cast by the shareholders.