In 2000, three special stock market segments for the trading of shares were introduced by BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros, now the B3, named Level 1, Level 2 and the Novo Mercado, which were amended in April 2011, and in the case of the Novo Mercado, also in October 2017. The new Novo Mercado regulation is part of the evolution process of B3’s special segments, seeking to maintain the value of listed companies in line with currently accepted international corporate governance practices. These stock market segments have the purpose of prompting public companies to (i) disclose information to the market and their shareholders in connection with their business in addition to the information required by law; and (ii) adopt corporate governance practices, such as best practices for management, transparency and protection of minority shareholders.

Our common shares are listed on the Novo Mercado. To have its shares listed on the Novo Mercado, a company, its management, controlling shareholders and the B3 entered into the Novo Mercado Participation Agreement and the company’s bylaws was reviewed to comply with the rules of the Novo Mercado.

Companies listed on the Novo Mercado are voluntarily subject to stricter rules than those provided for under the Brazilian Corporate Law, or any other segment of B3, such as requirements to (i) issue only common shares, except as specifically authorized under the Novo Mercado listing rules; (ii) ensure that shares of the issuer representing at least 25.0% of its total capital stock are effectively available for trading or at least 15.0% (a) where the daily average trading volume reaches or surpasses R$25.0 million considering the twelve previous months or (b) where the requirements set forth under the Novo Mercado listing rules are satisfied, in the case of a public offering; (iii) describe and include additional information in their quarterly reports; (iv) prepare annual and quarterly financial statements in English based on IFRS or on the Brazilian Corporate Law; (v) agree to adopt and publish (a) a code of conduct that establishes the principles and values that guide the company, (b) an insider trading policy that applies, at a minimum, to the issuer, its controlling shareholders, if applicable, the members of the board of directors and fiscal council, the executive management team and members of other corporate bodies that have a technical or consultative role as may be created from time to time by the company’s bylaws, (c) a related party transactions policy, (d) a risk management policy, (e) a compensation policy and (f) a policy that determines the criteria and procedures to nominate members of the management of the company; (vi) agree to require the issuer, its shareholders, directors and members of the fiscal council to resolve any and all disputes among them by arbitration before the Market Arbitration Chamber (Câmara de Arbitragem do Mercado – CAM); and (vii) agree to require the board of directors to deliver to the issuer (a) within five months after the end of the fiscal year, and (b) at the time of any public offering or distribution of securities, a list of the roles they hold on the board of directors, fiscal council, committees and other corporate bodies of other companies or entities.

Companies listed on the Novo Mercado are required to, among other things, (i) conduct public tender offers for the purchase of shares under certain circumstances, such as a delisting from the Novo Mercado; (ii) conduct offerings that will facilitate broad share ownership; (iii) extend to all shareholders the same conditions given to the controlling shareholders by occasion of the sale of the share control of the company; (iv) provide quarterly non-financial information, including the number of shares held by the company’s management and the number of outstanding shares; and (v) disclose related party transactions.

The Company reinforced its commitment to the best corporate governance practices, having adhered to practices recommended by the IBGC (Brazilian Institute of Corporate Governance) , such as forbidding the use of privileged information and the existence of a policy for the disclosure of material information; directors with experience in operational, financial and other matters , as well as experience in participating in other boards of directors; maintaining a reporting channel for filing complaints or resolving ethical dilemmas; and statutory provision for the installation of a fiscal council .

The “Code of Best Corporate Governance Practices”, published by IBGC, aims to make the Brazilian organizational and institutional environment more solid, fair, responsible and transparent, establishing recommendations for the creation of better corporate governance systems in organizations, aiming to optimize the value of the organization, facilitating its access to resources and contributing to its good performance and longevity.