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BRMALLS is committed to uphold the highest possible levels of corporate governance. In addition to complying with the Novo Mercado requirements, the highest level of corporate governance within the companies listed in B3, we are in constant search of ways to further improve our level of corporate governance.
We currently uphold a board structure composed by 7 members, of which 6 are independent. We also do not have any existing shareholder agreement, which guarantees that there is no effective controlling group in the company. Along with this, we only have one class of common stock, which are in free-float. We have great regard for our employee’s work and dedication, and so we developed tools to guarantee that their interests are in line with the shareholder’s interests through long-term incentive plans. These incentives work as "Performance Shares", with clear and transparent metrics. We also maintain an active auditing committee, along with a people and compensation committee.
Due to our efforts towards obtaining high levels of corporate governance, we highlight our score in the ISS Governance QualityScore. ISS Corporate Solutions is an American company, specialized in corporate governance and AGM’s of traded companies, where one of their services include the ISS Governance QualityScore, that grades companies based on corporate governance metrics and requirements. This score, that may vary from 1 to 10, where 1 represents the lowest risk, is recognized across the globe by several countries and investors. We currently maintain the score of 1, which represents the lowest risk and so the highest possible grade, featuring as one of the best graded companies in the country.
Corporate Governance Practices and Novo Mercado
In 2000, the Bovespa introduced three special listing segments, known as Level 1 and 2 of Differentiated Corporate Governance Practices and 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.
To be listed on the Novo Mercado, in addition to the obligations imposed by current Brazilian law, an issuer must meet all of the following requirements:
- issue only common shares;
- grant tag-along rights to all shareholders in connection with a transfer of control of the company, the acquirer being required to hold a public offer for acquisition of the shares to the other shareholders, at the same price per share paid for the controlling block;
- ensure that shares of the issuer representing at least 25% of its total capital are effectively available for trading;
- adopt offering procedures that favor widespread ownership of shares whenever making a public offering;
- comply with minimum quarterly disclosure standards;
- follow stricter disclosure policies with respect to transactions made by controlling shareholders, directors and officers involving securities issued by the issuer;
- submit any existing shareholders´ agreements and stock option plans to the Bovespa; disclose a schedule of corporate events to the shareholders;
- have a board of directors comprised of at least five members with a term limited to one year;
- within two years after listing shares on the Novo Mercado, prepare annual financial statements in English, including cash flow statements, in accordance with international accounting standards, such as U.S. GAAP or International Financing Report Accounting Standards (IFRS);
- adhere exclusively to the arbitration rules of the Bovespa, pursuant to which the Bovespa, the company, the controlling shareholder, the management and the members of fiscal council, if any, agree to resolve by arbitration any dispute or controversy related to the Novo Mercado listing rules;
- hold public meetings with financial analysts and any other interested third parties at least once a year to present information regarding its financial and economic position, projects and prospects; and
- if a decision to delist from the Novo Mercado is made, the issuer´s controlling shareholder must launch a tender offer for the acquisition of all outstanding shares at a minimum price to be established based on an independent appraisal.
Disclosure and Use of Information
Pursuant to CVM Rule # 358, of January 3, 2002, the CVM revised and consolidated the requirements regarding the disclosure and use of information related to material facts and acts of publicly held companies, including the disclosure of information in the trading and acquisition of securities issued by publicly held companies. Such requirements include provisions that:
- establish the concept of a material fact that gives rise to reporting requirements. Material facts include decisions made by the controlling shareholders, resolutions of the general meeting of shareholders and of management of the Company, or any other facts related to the Company¿s business (whether occurring within the Company or otherwise somehow related thereto) that may influence the price of its publicly traded securities, or the decision of investors to trade such securities or to exercise any of such securities¿ underlying rights;
- specify examples of facts that are considered to be material, which include, among others, the execution of shareholders¿ agreements providing for the transfer of control, the entry or withdrawal of shareholders that maintain any managing, financial, technological or administrative function with or contribution to the Company, and any corporate restructuring undertaken among related companies;
- oblige the officer of investor relations, controlling shareholders, other executive officers, members of its board of directors, members of the audit committee and other advisory boards to disclose material facts;
- require simultaneous disclosure of material facts to all markets in which the corporation¿s securities are admitted for trading
- require the acquirer of a controlling stake in a corporation to publish material facts, including its intentions as to whether or not to de-list the corporation¿s shares, within one year;
- establish rules regarding disclosure requirements in the acquisition and disposal of a material stockholding stake; and
- restrict the use of insider information.
Rights of Common Shares
Each common share entitles its owner to one vote in BRMALLS general and special shareholders‘ meetings. According to the agreement to be entered into with Bovespa for the listing the Company‘s shares in the Novo Mercado, BRMALLS cannot issue shares without voting rights or with restricted voting rights. Moreover, as determined in the Company‘s by-laws and the Brazilian corporation law, BRMALLS shareholders have the right to receive dividends and other distributions made in connection with the Company‘s common shares in proportion to their ownership interest in BRMALLS‘ share capital.
Holders of BRMALLS‘ common shares are entitled to be included in a public tender offer in the case that a controlling stake in the Company is sold and the minimum price to be offered for each share is 100.0% of the price paid per share of the controlling stake.
In event of BRMALLS dissolution, the Company‘s shareholders have the right to receive payments proportional to their ownership interest in BRMALLS‘ share capital, after the settlement of all the Company‘s obligations. Owners of BRMALLS‘ common shares have the right participate in the Company‘s share capital increases, in proportion to their ownership interest in BRMALLS‘ share capital, but are not obligated to subscribe to new shares in future share capital increases. According to the Brazilian corporation law, neither BRMALLS‘ by-laws 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, in proportion to ownership interest in BRMALLS‘ share capital, in the distribution of any residual assets in the event of the Company‘s dissolution;
- the right to preemptive rights in relation to the subscription of shares, convertible debentures or subscription bonuses, except in the circumstances described in the Brazilian corporation law;
- the right to inspect, in the manner set forth in the Brazilian corporation law, the management of corporate business; and
- the right to sell their shares in the circumstances defined by the Brazilian corporation law.