Integrity, transparency and respect for it’s customers, clients, suppliers and colaborators are compromisses from EDP Energias do Brasil Group.
Its interaction with the community in which it operates and the promotion of people’s progress are part of the Group’s values, as well as the concern with the impact its actions can cause to the environment.
We present below the principles and corporate policies that support the performance of EDP Energias do Brasil:
Establish guidelines for the EDP Brasil Group, to promote the management of potential (or involved) risks in EDP’s business and that may impact the Company and the stakeholders with whom we interact.
PURPOSES AND PRINCIPLES
Risk management within the EDP Brasil environment aims to align the risk appetite assumed with the company’s strategic objectives, to guarantee the achievement of results.
Risk management at the EDP Brasil Group considers the following principles:
- Risk management as everyone’s responsibility, from the Board of Directors to the individual employee. Risk, risk appetite and risk tolerance are key points in decision making for the execution of business activities, functions and processes;
- The ability to manage risks as a lever for the value of assets, projects and business opportunities, in addition to safeguarding human lives, the environment, the well-being of employees and reinforcing innovation;
- The transmission of trust in the business to shareholders, employees, customers, suppliers and the communities where the Company operates;
- The assessment of risks and opportunities for generating value in the short, medium and long term considers the direct and indirect economic, social and environmental impacts of the operations;
- The constant evolution and improvement to ensure compliance with the best international risk management practices; and
- Identification of efficient mitigators to ensure alignment of the Company’s strategy.
1.1. Lines of Defense
The risk management model adopted by EDP is based on the concept of three lines of defense, in which each agent in the organization has a specific role within the risk management process:
1st Line: Operates in operational risk management in the day-to-day routine, identifying, analyzing, evaluating, treating and controlling risks. It is responsible for the mapped risks and reports directly to the company’s senior management. It is made up of the company’s employees and business areas.
2nd Line: Consisting of the Risk and Control areas within the organization, its function is to provide guidance and methodological support to the company’s employees, in addition to ensuring the management and control of the risks mapped by the 1st line of defense.
3rd Line: Represented by the company’s Internal Audit. They provide independent assessments of the company’s risk methodology, bringing greater strength to the risk management system.
1.2. Risk Management Process
Corporate risk management is based on the best governance models such as COSO and ISO 31,000.
- We have adopted a structure dedicated to corporate risk management with the objective of identifying, evaluating, controlling, treating and monitoring the risks associated with the companies described in the scope of this policy;
- We identify and assess the risks associated with the organization’s internal processes, identifying failures and deficiencies that may generate financial impacts materialized in losses, to mitigate and control risks, providing instruments for analysis and decision-making;
- We classify risk events considering their probability of occurrence and financial impact;
- We continuously monitor the risk management process, evaluating proposals for improvements;
- We establish rules and procedures for risk management, respecting cost-benefit ratios, including those associated with activities provided by third parties;
- According to pre-established criteria, the methodology allows the contracting of insurance to cover risks;
- We maintain a risk and loss basis observing the scope, consistency, integrity and reliability;
- We periodically prepare risk scenarios to assess exposure to external events;
- We periodically review and evaluate the model used in risk management, through quality and precision tests, carried out by a separate or outsourced area, based on the best market practices;
- We keep up-to-date documentation regarding risk management and senior management decisions related to risk management;
- We periodically make public disclosure of information to the market to allow investors and other interested parties to verify how risks are managed; and
- We disseminate a risk management culture through awareness, awareness and training programs.
Establish guidelines for EDP Brazil to promote people’s care and appreciation through development and professional improvement and personal and encouraging diversity.
DESCRIPTION AND RESPONSIBILITIES
The guidelines for People Management at EDP Brasil, which direct the actions of the company, are:
- Consolidation and maintenance of EDP Culture;
- Appreciation of diversity;
- Non-discrimination, equal opportunities and transparency for all levels of positions;
- Remuneration practices to ensure the attraction and retention of professionals;
- Promotion of safety and well-being of its employees, in the company’s internal and external environment, and;
- Encourage vocational training and continuous development of employees.
A public purpose and 12 principles guide the EDP Brasil Group. The EDP Culture movement aims at “our energy always to take better care”, and 12 principles, namely: life always first, unconditional respect, ethics and the search for the best for everyone, responsibility for the whole, consistency in speaking and in doing justice inequality and difference, focus on solutions and the greater purpose, search for excellence by the human, team spirit and companionship, shared knowledge, constant innovation, and the customer our reason d ‘être. These guiding principles characterize the EDP way of being and define a behavioral profile that can generate sustainable social changes throughout its value chain.
With the practice of the purpose and the EDP Culture movement, we seek a healthy work environment for employees, where they can be themselves, encouraging them to develop and share knowledge with other groups and communities, voluntarily. The search for a balance between professional and personal life and the generation of value for customers and other stakeholders are considered. In other words, the creation of a more humane, sustainable, and fair environment for all.
1.2. Appreciation of diversity
The EDP Brasil Group recognizes human rights as fundamental and universal principles that guide its practice and commitment to a more just and inclusive society. In this way, it ensures its responsibility towards sustainable development and corporate citizenship, actively contributing to promoting a work environment free from discrimination, in which all people feel respected and safe to be who they are.
With the EDP Inclusion & Diversity Program, the EDP Brasil Group reaffirms diversity as a tool to promote human development and generate innovation and the engagement of its employees, while also representing an opportunity to drive positive results for the business. It also reiterates its commitment to promoting an inclusive environment based on the acceptance of gender, sexual, cultural, racial, religious, or any diversity.
1.3. Recruitment and Selection
The EDP Brasil Group ensures the filling of vacancy demands by professionals in the different business units of the companion Grupo EDP Brasil, through the processes of Internal Recruitment and External Recruitment, in a way that encourages diversity and inclusion guarantees non-discrimination, equal opportunities and transparency for all levels of positions under CLT, internship and temporary, temporary vacancies, to select professionals who have profiles compatible with the EDP Culture and with the competencies, skills, and attitudes required by the company and the position.
1.4. Performance and Skills Management
The EDP Brasil Group is committed to monitoring performance and development, increasing employee performance, tools, and processes that promote learning, and establishing a competitive culture focused on results through the application of mechanisms that encourage meritocracy and a high school culture performance and high performance.
EDP Brasil strives for compensation practices to ensure external competitiveness and internal equity, attraction, and retention of professionals with effective management aligned with business strategy.
EDP Brasil manages its benefits policy to provide its employees’ safety and well-being in the company’s internal and external environment. Also, it highlights your benefits package as a competitive advantage in attracting and retaining its employees. The company demonstrates its responsibility to its employees by adopting a package of benefits in line with market practices.
1.7. Learning Training and Development
The EDP Brasil Group encourages learning, professional training, and the continuous development of its employees through content with technical, behavioral, organizational, and management domains, which are essential to obtain the expected levels of performance and excellence. Professional development is also applied to the company’s value chain through assessment, monitoring, monitoring, and promotion of acceptable fundamental practices to achieve levels of learning, performance, and excellence in its suppliers and third parties.
1.8. People Planning and Succession Management
The EDP Brasil Group carries out the process, implements tools that ensure succession planning for management functions and critical positions, intending to provide the mapping of the existence of professionals’ internal availability to strategic positions, the development of new leaders, and the correct management of knowledge and business continuity.
Formalization of the principles that guide the company’s relationship with stakeholders, which influence or are influenced by the company’s activities, aiming at the generation of shared value, identifying opportunities between the parties, and the management of social and relationship capital.
The Relationship with Stakeholders is a strategic priority for the EDP Brazil Group, in the means that, open and transparent dialogue with its interesting parts is fundamental to ensure:
- The viabilization of strategic planning and performance of excellence, the strengthening of corporate governance and the possibility of searching for innovative solutions;
- Strengthen the relationship of trust, sharing knowledge and relevant information, anticipating challenges and identifying new opportunities for cooperation with Stakeholders;
- The implementation of essential practices for accountability in the following dimensions: economic, social, environmental, and reputational, so as a reception of feedback, allowing EDP Brazil Group to reevaluate itself continually, and:
- The attendance to the legal requirement, especially at times of impact assessment from a new development of EDP Brazil Group and, if necessary, be an instrument for crisis management and conflicts.
1.1.1. Guiding Commitments
The relationship with interesting parts – EDP Brazil Group Stakeholders is based on four axes or guiding commitments: understanding, communicating, trusting, and collaborating.
We dynamically and systematically identify the Stakeholders who influence and are influenced by the EDP Brazil Group, analyze and seek to understand their expectations and interests. How we should act:
- Map, identify and evaluate the risks and impacts generated in the local community, society or other Stakeholders resulting from the company’s activities;
- Be accountable to the agents over whom the organization has an impact and the agents who affect the organization, ensuring that minorities have the same capacity of involvement of the remaining Stakeholders;
- To identify dynamically systematically the Stakeholders that influence and influenced directly and indirectly by the EDP Brazil Group and its activities, as well as issues pointed out as relevant by the Stakeholders, and;
- Prioritize in a balanced and equitable manner the Stakeholders, and the subjects pointed out by them as relevant.
We promote a two-way dialogue with Stakeholders, through information and consultative actions. We hear, inform, and respond to Stakeholders in a consistent, clear, rigorous, and transparent manner to build a closer, more robust, and lasting relationships. Ensuring that Stakeholders’ complaints are answered and managed appropriately. How we should act:
- Ensure that Stakeholders have access to information by establishing direct, efficient and direct bidirectional communication channels, actively providing clear, comprehensible and accurate information, ensuring dissemination and dissemination to the various stakeholders, promoting and providing appropriate means of engagement;
- To proactively consult and listen to the concerns, interests, and expectations of Stakeholders, to prepare auscultation plans and engagement strategies that consider the characteristics of the different stakeholders, and;
- Respond to the relevant issues identified by the Stakeholders within a reasonable time, considering the characteristics of the stakeholders involved.
We believe that fostering a climate of trust with Stakeholders is crucial to establishing stable and long-term relationships. Our relationship with stakeholders is based on values such as transparency, integrity, and mutual respect. How we should act:
- Establish a transparent relationship with the Stakeholders, ensuring that they know and understand the objectives of the EDP Brazil Group;
- Inform the Stakeholders about the economic, environmental and social impacts and risks arising from the activity of the EDP Brazil Group or a specific project, which could significantly influence them;
- Respect the views and rights of Stakeholders, treating them fairly, without discrimination, respecting diversity and their legal rights, and;
- Ensure that the relationship actions are based on the values, policies, and ethical principles of the EDP Brazil Group.
We collaborate with Stakeholders in the construction of strategic partnerships that bring together and share knowledge, skills, and tools, thus promoting value creation in a differentiating way. How we should act:
- Integrate into the company’s strategy the relevant contributions identified by the Stakeholders;
- Share knowledge and skills with Stakeholders, aiming at risk management and identifying the set of opportunities;
- Work cooperatively in building solutions, establishing strategic partnerships that produce positive results for both parties, including prevention, mitigation and compensation of impacts generated by our operations and in cases where residual impacts remain, offset or neutralize the risks and impacts On the Stakeholders, and;
- Share the performance results of the EDP Brazil Group and the results of the different relationship processes with Stakeholders, providing, where appropriate, relevant performance information.
1.2. Stakeholders Segmentation Model
The Stakeholders of the EDP Group are all entities or persons that influence or are influenced by the Group’s activities, products, and services. They are organized into four segments:
- Value Chain: Employees, Trade Unions, Suppliers, Scientific Community, Clients, Consumer Associations, and Business Associations.
- Market: Competition, Financial Entities, Shareholders, and Investors.
- Democracy: Government, Public Organs, Regulation, National Congress, Assemblies, Political Parties, and International Institutions.
- Social and Territorial Organization: Civil Society Organizations, Local Communities, Municipalities, Municipalities, Media, and Leaders of Opinion.,
1.3. Main Highlights in the Relationship with Stakeholders
1.3.1. Union Relations
The EDP Brazil Group acts with transparency and respect in union relations. It is based on its Code of Ethics and the fundamental and universal principles of Human Rights.
Also, it promotes the free trade union association. It maintains a permanent channel of negotiation and dialogue with the union representation of collaborators, aiming to resolve conflicts of a labor nature, the regulation of labor relations, and the conditions of employment resulting in normative agreements.
To guarantee this process, the management of the EDP Brazil Group attributes to the People Management area:
- Receive claims, clarify doubts and provide access to composition and collective bargaining;
- Conduct collective negotiations at a local level and can be carried out by third parties duly accredited by the companies;
- Recognize the legitimacy of trade union representation;
- Ensure compliance with the Collective Labor Agreement.
1.3.2. Illicit Acts
The EDP Brazil Group acts with transparency and respect in its relationship with all stakeholders, as it is based on its Code of Ethics and the fundamental and universal principles of Human Rights.
The EDP Brazil Group adopts and disseminates measures to combat all forms of Corruption, Administrative Improbity, Money Laundering, Free Competition, Predatory Prices, Conflict of Interests, Bribery and Cartel formation, to avoid the occurrence of acts, omission, Or the creation and maintenance of situations of favor or unstable conditions characterized by illicit acts.
The EDP Brazil Group guarantees the implementation of these measures by creating adequate internal structures, planning, and continuous evaluation of the Anti-Bribery Management System. In addition to promoting corporate oversight through the Ethics Committee, which is responsible for receiving and monitoring communications regarding any evidence of illicit acts by the company and its third parties.
The EDP Brazil Group provides a communication channel in which its employees and all interested parties can indicate conduct that they deem inappropriate to this policy’s principles and the EDP Brazil Group Code of Ethics. All retaliation is repudiated.
1.3.3. Human Rights
The EDP Brazil Group acts with full respect for Human Rights, within national and international legislation, participating in several international agreements to protect these rights, and incorporating in its strategic and operational activities all the necessary measures to ensure that there is no direct or indirect relationship with slave and child labor, with sexual exploitation independent of form, with restrictions on human freedom and condition, with violence, torture, and arbitrary detention, moral and sexual harassment, or discrimination in all its forms.
The EDP Brasil Group promotes Human Rights through freedom of opinion and expression, the diversity of cultures and ethnicities, the health and well-being of all Stakeholders affected by its activities, free organization and association, and freedom of conscience and religion.
To ensure respect for Human Rights in its operations and its value chain, the EDP Group establishes management guidelines and procedures, including assessing, preventing, and mitigating risks and impacts.
1.3.4. Public Agents
Public Agents are important Stakeholders in the relationship with EDP Brazil Group. Due to the public/ sector exposure of this stakeholder and the legislation governing the relationship with the Public Agent, it is necessary to ensure the alignment and compliance with the ethical principles established in the company’s Code of Ethics, internal policies, norms, and procedures, and current legislation. In this way, the EDP Brazil Group shows:
- The entire relationship with public agents is ethical and transparent as provided in the Code of Ethics, which regulates any behavior of exchange of privileged information, the benefit of parties interested in gaining an advantage directly or indirectly.
- All situations that may cause a perception of obtaining an undue advantage due to the exercise of the position, mandate, function, employment or activity of the public agent, are reported for the appropriate treatment.
- Special guidance to mitigate risks of anticompetitive conduct, for higher risk functions.
- Provides for collecting contributions to expand and ensure compliance.
- Provides for a periodic review of the Code of Conduct and Corporate Policy.
The realization of these relationships, in the various spheres of Public Agents, respects the legislation and procedures in force, to document the subjects dealt with and ensuring the suitability of the process.
1.3.5. Gifts and Presents
The exchange of courtesies is common practice in many countries and is part of the relationship between Stakeholders. In the EDP Group, courtesies respect amounts and values within acceptable parameters and within limits aligned with best market practices and that respect, the ethical principles described in the Code of Ethics and the Internal Standard for Gifts, Presents, and Events, to avoid situations that constitute undue benefits for any of the parties involved.
1.3.6. Social Investment
Social Investment is understood as the “voluntary transfer” of companies’ resources in planned, systematic, and monitored way, for public purposes, thus representing a form of corporate contribution directed at meeting community needs and priorities, with a focus on Transformation of their social reality. EDP Brasil systematically evaluates the positive and negative impacts its activities generate on people and society, including human capital (experience and knowledge), social capital (shared value, institutions), and relational capital (connections and network). Measuring these concepts, associated with well-being and socioeconomic impact, can facilitate the analysis of social capital flows, in parallel with the flows of financial and natural capital.
Social Investment practices represent the company’s commitment to the communities’ social, environmental, and cultural development where the company operates and contributes to the following objectives:
- Promote the insertion of the company in the communities surrounding the premises, enterprises and prospecting new business;
- Contribute to the generation of economic, social and environmental value for society;
- Contribute to the social license to operate;
- Contribute to the management of socio-environmental impacts;
- Contribute to the development of public policies and collective agendas for sustainable development;
- Strengthen the image and public recognition of the company, and;
- Contribute to the quality of life and preserve the socio-environmental balance of the regions of their enterprises.
1.3.7. Supplier Management
The EDP Brazil Group promotes Sustainability and Relationship in the Supply Chain according to the following 12 commitments:
- To develop practices of corporate responsibility and integrity with suppliers, ensuring compliance with the law and other obligations and procedures adopted by EDP Brazil Group and establishing a Code of Conduct for Suppliers;
- Establish environmental requirements in contracting and promote the adoption of the Environmental Policy of the EDP Group, preventing and mitigating adverse impacts arising from activities;
- Ensure equal treatment, transparency, and impartiality by ensuring a fruitful dialogue respecting mutual agreements with suppliers;
- Establish consultation and communication channels with suppliers, promoting initiatives that improve economic, ethical, social and environmental performance;
- Promote and adopt conduct of integrity and moral and ethical elevation in the supply chain, by applying the Code of Ethics of the EDP Group, refraining from any practices of bribery, corruption, extortion or fraud;
- Promote the confidentiality of all shared information, ensuring that it is not transmitted to third parties and that it respects the rights of all parties involved;
- Eliminate conflicts of interest that may impair the objectivity and independence of the decision process;
- To promote respect for human dignity and human rights and to reject any form of forced labor or child labor, persecution, discrimination, abuse or other forms of physical or psychological violence;
- Establish social, work and safety, hygiene and health requirements in contracting and subcontracting, ensuring compliance and permanent monitoring;
- To support the economic, ethical, social and environmental development of the local communities in which the EDP Brazil Group operates and cooperate with sectoral and international organizations for the joint promotion of Sustainability in the supply chain;
- Encourage continuous improvement, innovation and the sharing of acceptable practices in terms of Sustainability, efficiency, quality of goods and services and to promote new business solutions/opportunities;
- Define organizational, negotiation, and contracting models that value Sustainability throughout the value chain, establishing objectives and verifying the fulfillment of its goals.
1.3.8. Interaction with stakeholders
Bearing in mind that the relationship with stakeholders is a strategic priority for the EDP Brasil Group, the Institutional Relations and Stakeholder Management Department, guides employees who play this role of interacting with external stakeholders, seeking guidance from the area on the main procedures adopted by the board. It also informs the relationship with this stakeholder for the area within its scope, the responsibility to carry out the management of information regarding the interested parties.
The EDP Brasil Group manages its business with the objective of being an integrated company of reference in the Brazilian energy sector, ensuring full compliance with applicable standards and legislation.
The EDP Brasil Group considers that it is an ethical and civic duty to respect and follow the Constitution and the laws of the country in the execution of its business activities, contributing to the well-being of its citizens, to the sustainable development of the Group’s businesses and to the Creation of value for all stakeholders.
The EDP Brasil Group Code of Ethics integrates the values promoted by the Company in business management and defines the principles and behavioral values expected and required from employees and suppliers.
1.1. Strategic Business Planning
As a business management tool, strategic planning guides decisions at all hierarchical levels, directing the use of available resources efficiently, ensuring the continuity and growth of the business, reinforcing its competitive position in the market.
The elaboration of the strategic planning is an institutionalized process, approved in the scope of the Board of Directors, permeates the entire Company, considers the challenges and the context of the EDP Brasil Group, regional market conditions, economic, financial, management and technical conditions, As well as the interests of its stakeholders.
1.2. Resource Management
The EDP Brasil Group establishes the guidelines and responsibilities to be observed in order to minimize the financial, operational, legal and regulatory impacts resulting from the unavailability of human, material and technological resources essential for the operation of its operations.
Faced with the commitment to be permanent, EDP Brasil Group seeks to ensure the sustainability of the business, ensuring that the processes and the support infrastructure are able to operate efficiently.
1.3. Operational Structure
The EDP Brasil Group aims to:
- Ensure that business conduct is based on ethical principles, with transparency and equity, respecting human rights, internal rules and law;
- Adopt socially responsible business practices, contributing to the development and well-being of the community;
- Contribute to the development of individual and organizational skills, promoting the professional growth of employees;
- Provide services to clients with safety, quality, efficiency, respect and integrity;
- Encourage suppliers and contractors to adopt these guidelines;
- Adopt asset management practices throughout its life cycle, aiming to continuously improve the level of reliability, safety, effectiveness and efficiency, to maximize the value invested in a sustainable way, mitigating associated risks and in compliance with legal requirements , Statutory, regulatory, financial and other applicable laws.
1.1. The purpose of this Dividend Policy (“Policy”) is to consolidate the rules and guidelines applicable to EDP – Energias do Brasil S.A. (“Company”) as concerns the distribution of dividends to facilitate the understanding of the matter by shareholders and other stakeholders.
2.1. The present Policy is based on (i) Law 6,404, of December 15, 1976, as amended (“Brazilian Corporations Law”); (ii) the general rules issued by the Brazilian Securities and Exchange Commission – CVM governing the subject; (iii) the Company’s bylaws (“Bylaws”); and (iv) the resolutions of the Board of Directors and/or the Company’s General Shareholders’ Meeting.
For the purposes of this Policy, the following definitions shall apply:
“Net Debt”: the sum of the Company’s interest-bearing debt, represented by loans and financing agreements with financial institutions or the capital markets, whether domestic or international, as recognized in current and non-current liabilities, minus cash and cash equivalents (corresponding to the sum of “cash and cash equivalents”, “financial investments”, “escrow” and “securities”), in any case, as shown in the consolidated balance sheet provided with the Company’s Consolidated Financial Statements;
“Adjusted Net Income”: adjusted Net Income calculated as the balance of the deductions and additions provided for in items I, II and III of article 202 of the Brazilian Corporations Law, and income realized as Long-Term Cash such as: (i) Transmission Companies’ EBITDA, whose contribution to adjusted EBITDA is recognized in accordance with regulatory EBITDA; (ii) the VNR (New Replacement Value) of the Distribution Companies; (iii) plus or minus the Capital gain/loss from M&A operations, business combinations or impairments, and not associated with effective cash gains or losses; (iv) Contingencies; (v) post-employment benefits; and (vi) deferred income tax.
“Transmission Companies’ Regulatory EBITDA”: Transmission Companies’ EBITDA calculated according to the Electric Sector Accounting Manual as prepared by the National Electric Energy Agency and/or the applicable sectoral law in force.
4.1. The Brazilian Corporations Law and the Bylaws require the Annual General Shareholder’s Meeting to be held by April 30 of each year, in which, among other matters, shareholders must decide on the distribution of annual dividends based on the Board of Directors’ proposed allocation of net income for the previous year.
4.2. Pursuant to the Company’s Bylaws, a minimum 25% (twenty-five percent) of net earnings calculated on the balance of the deductions and additions provided for in items I, II and III of article 202 of the Brazilian Corporations Law must be distributed as a mandatory dividend.
4.3. Several factors in addition to the legal minimum shall be analyzed for the purposes of proposing and resolving the payment of dividends, such as: operating income; the Company’s financial condition, cash needs and future prospects; reinvestments needs at the base and regulatory obligations; investment opportunities with appropriate returns; among other factors analyzed by the Board of Directors and that the Company’s shareholders may deem relevant. This analysis shall identify the risks inherent to the Company’s activities and the attainment of the goals established in its strategic planning.
4.4. Pursuant to the foregoing and other provisions hereunder, the purpose of the present Policy is to formalize the Company’s management’s intent to propose, from the General Shareholders Meeting that approves the accounts for the fiscal year ending December 31, 2020, the distribution of dividends and interest on shareholders’ equity, which shall be the highest among:
(a) twenty-five (25%) percent of net income, calculated on the balance of the deductions and additions provided for in items I, II and III of Article 202 of the Brazilian Corporations Law, pursuant to article 31 of the Company’s Bylaws;
(b) fifty (50) percent of Adjusted Net Income, as defined hereunder; or
(c) R$ 1.00 (one Brazilian Real) per share.
4.4.1. The criterion of item “c” above shall be adjusted in the event of a change in the number of equity shares arising from share splits, reverse splits, or similar events.
4.5. Without prejudice of the foregoing, the Board of Directors is commit to propose the distribution of any remaining free cash flow, that is, free cash generated in the previous fiscal year and not reinvested, as supplementary dividends and/or use thereof if a share buyback program, subject to: (i) the legal limitations and regulations, notably those imposed by the Brazilian Corporations Law and CVM Instruction No. 567, of September 17, 2015; (ii) the Company’s financial leverage (Net Debt-to-Adjusted EBITDA) ratio, calculated based on the financial statements for the respective fiscal year. The result of this formula after the distribution of dividends and/or interest on shareholders’ equity and/or buybacks shall target an index range 2.5x and 3.0x with a minimum of 2.0x; and (iii) the provisions of item 4.3, above.
4.6. The amounts in item 4.4, above, shall consider proceeds distributed as intermediate dividends, interim dividends, or interest on shareholders’ equity paid during the relevant year.
4.7. The respective proposals for the allocation of net income by the Company’s management shall be subject, in any case, to the General Shareholders’ Meeting endorsement and/or approval and may, at any time, be reviewed based on the Company’s plans and needs.
4.8. The Board of Directors, considering the circumstances of the market in which the Company operates, may propose, ad referendum the Company’s shareholders, the payment of dividends in amounts and under conditions other than those determined by the previous items.
5. FINAL DISPOSITIONS
5.1. The Board of Directors shall consider, as appropriate, the need for any revisions to this Policy, in accordance to statutory, legal or regulatory changes to which the Company may be subject, as well as to improve the corporate governance practices concerning the herein rules and procedures. Additionally, the Company’s Executive Board of Officers may, at any time, suggest a revision of the present Policy to the Board of Directors.
5.2. The provisions contained in the Company’s Bylaws, the Brazilian Corporations Law and the regulations issued by the Brazilian Securities and Exchange Commission – CVM, shall prevail over the present Policy in the event of omission or inconsistency.
5.3. This Policy was approved at a meeting of the Board of Directors held on August 28, 2020, and entering into force on the same date for an undetermined period, until otherwise resolved.
Formalize the commitments of EDP Brazil to establish policies and guidelines concerning:
- Integration of sustainability principles and innovation in all areas processes within the organization, optimizing performance and creating shared value;
- Environmental management of the company ensuring responsible operations, considering the impacts of our activities along the value chain on biodiversity and ecosystem services, the sustainable use of natural resources and climate change;
- Establish principles inherent to the management of risks to health and safety at work;
- Management of intangible assets, aiming to generate shared and differential value to the organization’s core business, considering human, social, environmental and intellectual capital.
PRINCIPLES OF ACTING
1. Principles of sustainable development
Based on the vision of being a global energy company, a leader in value creation, innovation and sustainability and in line with the Organization’s Principles of Sustainable Development, EDP Brazil is committed to:
A. Economic and social value
- Create, ongoing basis value for shareholders;
- Increase efficiency in the use of resources and decrease exposure to risk;
- Contribute to improving competitiveness, namely through the provision of excellent services and predicting customer’s expectations and needs;
- Integrate environmental and social aspects into the plan and decision-making processes, including investments, activities of the company and its value chain, especially in the project’s designs and developments, changing current working conditions and supplier’s critics and customers;
- Contribute to the improvement of the population’s quality of life.
B. Eco-efficiency and environmental protection
- Promote the use of renewable energy sources, cleaner and more efficient energy technologies;
- Promote the improvement of energy efficiency consumption;
- Manage the impacts of activities in search of a positive environmental balance and thus assess, control, mitigate, compensate for the social-economic and environmental impacts of the projects and activities, with emphasis on the issues of waste and climate change, adapting to international standards corporate social responsibility;
- Increase operational efficiency and establish, whenever applicable, targets for reducing or improving efficiency related to the preservation of biodiversity and ecosystem services, efficient use of natural resources and energy, emissions of Greenhouse Gases (GHG), wastes and effluents;
- Contribute actively to the preservation of the biodiversity environment;
- Promote the improvement of environmental management practices in the value chain.
- Support research, development, innovation (RDI) projects that contribute to the value generation and reduce the negative impacts caused by the company’s operations. All based on the concepts of smart grids, clean energy, customer-focused solutions, energy storage, data processing technologies, and operational efficiency;
- Foster entrepreneurship through initiatives aimed at the entrepreneurial ecosystem;
- Promote intrapreneurship at EDP Brazil through programs focused on the dissemination of innovation culture and new forms of work;
- Promote innovation and creativity, looking for new market opportunities and improving processes;
- Promote collaborative practices in the design phase, production phase, and service delivery;
- Promote research and technological development and knowledge management in the energy field.
D. Integrity and good governance
- Comply with legislation and established ethical and deontological standards.
- Respect and promote respect, for human rights, within our sphere of influence.
- Ensure a business governance that is integral, participatory, and competent.
- Adopt best market practices concerning ethics, human rights, corporate governance, anti-corruption, and other illicit acts maintaining diversified and integrated reporting, accountability for shareholders and customers, and other members of the value chain.
E. Transparency and dialogue
- Ensuring an open and trusting relationship with stakeholders.
- Promote consultation and communication channels with stakeholders, considering their contributions and expectations.
- Report transparently and objectively on economic, environmental, and social performance.
F. Human capital and diversity
- Promote integrity, rigor, individual responsibility, and teamwork, promoting diversity.
- Promote the development of employee skills and recognize excellence and merit.
- Improve the health, safety, well-being of employees.
- Disapprove of abusive, discriminatory practices, and guaranteeing equal opportunities.
- Promote employee satisfaction and motivation.
G. Energy Access
- Promote access to energy, a reliable, safe, and quality manner.
- Adapt commercial policies to specific social characteristics of the market.
- Ensure equity in energy access and energy systems.
H. Social development and citizenship
- Promote social innovation, maximizing the positive social impact of the activity.
- Support social responsibility actions based on transparent criteria evaluating the social return of invested resources.
- Cooperate in the sustainable development of societies.
2. Occupational environment
EDP Brazil, a company that operates in all segments of the electricity sector, recognizes that the environment and sustainable use of natural resources is essential for the sustainability of the Group’s operations. Therefore, it works promoting respect for the environment, in search of sustainable development, and establishes the following commitments regarding the continuous improvement of environmental management and the reduction of the impacts of its activities:
- Ensure compliance with legal requirements regarding current environmental legislation and the non-authorization to carry out any potentially polluting activities without the necessary authorizations and necessary controls;
- Identify and monitor the aspects of the occupational and environmental impacts, and establish controls for the significant aspects, and risks;
- Manage risks to eliminate, reduce, control, prevent incidents, prevent accidents, prevent environmental or material losses, and ensuring the communication of risks and mitigation measures;
- Promote the use of technologies and process that contribute to the protection of the environment and environmental pollution risks, contributing to the rational use of natural resources and the reduction of emissions, waste, and effluents;
- Demonstrate commitment to continuous improvement environment processes, based on the establishment and review of periodic objectives, goals and action plans;
- Promote initiatives aimed at disseminating knowledge about the efficient use of environmental resources and ecosystems, GHG emissions and the consequences of climate change, in addition to their implications for the company’s business;
- Identify risks, opportunities and implement measures to improve the environmental quality on located sites, minimize and mitigate impacts on the environment and climate change and adapt to their effects;
- Ensure the investigation of environmental incidents, identifying their cause and determining actions to prevent their repetition;
- Promote formal communication, consultation and stakeholder engagement processes related to the impacts on the environment;
- Contribute to the adoption of best practices in the value chain, through the establishment of specific procedures, especially for critical stages of the chain;
- Maintain a perceived leadership in the environment so that all employees are encouraged to behave sustainably.
A. Efficient use of resources
EDP Brazil understands the sustainable use of available natural resources is extremely important for the company and society and is committed to:
- Promote the efficient use of natural resources in its activities and within the framework of a circular economy, in particular:
- In use and sustainable management of water in all the company’s processes, operations, and facilities.
B. Climate changes
EDP Brazil closely monitors international and national regulations on climate change and its impacts on its operations and commits to:
- Support and encourage projects, products, and services that make it possible to reduce greenhouse gas (GHG) emissions and promote social and environmental benefits in the value chain, covering education and investment measures in equipment and new technologies;
- Promote the internal energy efficiency and with partner suppliers in final consumption;
- Deliver low carbon products and services to customers.
C. Biodiversity and ecosystem services
EDP Brazil is aware of the sensitivity of natural ecosystems and the pressures to which they are exposed, as well as the inherent value of initiatives aimed at protecting biodiversity. In this way, it establishes the commitments related to biodiversity and ecosystem services and the management of the impacts of its activities along its value chain.
EDP Brazil, aiming to play an active role in the conservation and preservation of biodiversity, commits itself to:
- Integrate the impact valuation on biodiversity in the Distribution, Transmission, Commercialization and Generation units on, plan, construction, and operation;
- Contribute to avoid or reduce the loss of biodiversity, minimizing the negative impacts resulting from its activity, privileging a dynamic, comprehensive management, locally participated and with a long-term vision, aiming at a globally positive balance;
- Promote appropriate use of ecosystem services and natural resources and support initiatives for the conservation of nature and the enhancement of biodiversity, considering cultural and regional characteristics;
- Contribute to deepen scientific knowledge about the different aspects of biodiversity, namely through the establishment of partnerships;
- Regularly and transparently disseminate their biodiversity performance.
3. Occupational safety and health
In EDP Brazil’s undertakings, any task is more important or urgent that is should be performed without security. We believe that any accident or occupational disease is preventable and encourage the commitment of all employees in this principle, considering:
- Leadership as a promoter of Security management;
- No situation or urgency of service can justify endangering someone’s life;
- Ensuring a safe and healthy work environment, ensuring compliance with legislation as a minimum level of adequacy;
- Promote the knowledge and information of employees about the risks inherent in the activities, making them aware of compliance with safety standards;
- Provide consultation and participation of workers in prior recognition, control, and reduction of all risks associated with processes, as well as the elimination of hazards;
- Seek continuous improvement in the Security area with the involvement of all levels of management and the support of all employees, business partners, suppliers, and stakeholders.
EDP Brazil, a company that operates throughout the Energy Value Chain, recognizes that the quality of the service provided is essential for the sustainability of the Group’s operations. Therefore, it establishes as its commitments:
- Comply with the requirements of our customers and partners to satisfy their needs and expectations with the offer of services and products of recognized quality, continuously improved and at a competitive cost within the standards of the market where it operates;
- Seek customer satisfaction through the appropriate treatment of their claims, establish processes that comply with customer and regulation requirements, having basic guidelines to a systematic evaluation of complaints, identify fundamental causes, and continually seek to process improvement;
- Create long-term partnership relationships with suppliers, which favor the development of future business opportunities for both parties;
- Ensuring a safe working environment to provide our employees with the opportunity for professional and personal development, in a work environment compatible with the requirements of people’s performance and fostering innovation;
- Continuously evolve the company’s processes and organizational structure through the definition of objectives, measurement and temporal, quantitative and qualitative monitoring, respecting legal and regulatory requirements;
- Ensure the commitment of the leadership in the development of the quality process, achieving positive results that correspond to the return on investments and sustainability to ensure the continuity of the company in the market where it operates.
5. Intangible Assets
EDP Brazil, in alignment with their business strategies, considers that it should prioritize intangible assets that generate and share differential value to the business core of the organization, which are:
- Human Capital: results from the EDP Brazil Culture, the skills and technical knowledge of the staff and the employee’s satisfaction with the Company;
- Intellectual Capital: the set of intangible assets that differentiate the Company in the market and support the business strategy, such as innovation and research and development;
- Social Capital: results from the brand’s reputation, resulting from the relationships established with customers, suppliers, and communities;
- Natural Capital: through the management of natural resources and ecosystem services which EDP Brazil maintains impact or dependence relationship.
EDP Brazil establishes guidelines and methods to identify, evaluate, protect, develop, manage and measure these assets to maintain organizational knowledge to achieve its strategic vision.
We have established a Policy for Information Disclosure and the Preservation of Secrecy by Potential or Actual Holders of Relevant Information, according to CVM Ruling No. 358, of 3 January 2002, as amended by CVM instructions no. 369 of June 11, 2002 and no. 449 of March 15, 2007.
EDP Energias do Brasil S.A.
The Company’s information disclosure policy was approved by the Board of Directors’ Meeting held on December 18, 2007.
I. Disclosure Policy Preamble and Definitions
Considering the assumptions that:
- The investor should have immediate access to any Material Act or Fact (as defined below):
- The Company is obliged to disclose any Material Action or Fact (as defined below) in an organized, clear, truthful, equal and sufficient form; and
- Controlling Shareholders and Managers (as defined below) are obliged to evaluate the time and opportunity to disclose the Material Action or Fact, including the possibility of maintaining confidentiality to the Company’s benefit when they understand that the disclosure of the Material Action or Fact will pose a risk to legitimate Company’s interest;
Current Company’s information disclosure policy was approved by the Board of Directors.
|Controlling shareholders||Company’s controlling shareholders, direct or indirect.|
|Managers||Members of the board of directors and executive board, acting on their own behalf or on the behalf of the Company.|
|Company||EDP – Energias do Brasil S.A.|
|Members||Members of the supervisory board and of any bodies with technical or consulting functions that are created according to the bylaws|
|CVM||Brazilian Securities Commission.|
|Recipients||Related Controlling Shareholders, Managers, Board members and Holders of Information.|
|Related holders of information||whoever in the capacity of employee or not, due to its position, function or job in the Company or in controlling companies, subsidiaries or associates of the Company or under common control is aware of information related to Material Action or Fact (as defined below), especially those that participate in areas directly subordinated to Controlling Shareholders, Managers and Board members.|
|Material action or fact||any (i) decision of Controlling Shareholders; (ii) resolution of the shareholders’ meeting or Management meeting: or (iii) any other political-administrative, technical, business or economic-financial, or related to the business action or fact that may significantly influence on: (a) the quotation of securities issued by the Company or referred to them; (b) the decision of investors on buying, selling or maintaining those securities; or (c) the decision of investors about exercising rights inherent to the condition of holder of securities issued by the Company or referred to them.|
|Instruction 358||Instruction no. 358, issued on January 3, 2002 by CVM, as amended by CVM instructions no. 369 of June 11, 2002 and no. 449 of March 15, 2007.|
|Disclosure Policy||This Company Information Disclosure Policy.|
All Recipients (Related Controlling Shareholders, Managers, Members and Holders of Information) are subject to the Disclosure Policy.
III. Potentially material action or fact
Materiality criterion of the Material Action or Fact is based on the possibility of substantially influencing the decision of investors of negotiating with Securities.
Material Fact, as defined above is any action or fact able to substantially influence on:
- the quotation of securities issued by the Company or referred to them;
- the decision of investors on buying, selling or maintaining those securities; or
- the decision of investors about exercising any rights inherent to the condition of holder of securities issued by the Company or referred to them.
IV. Examples of Material Acts or Facts
The transcription of Material Action or Fact examples provided for in Instruction 358 is presented below. Recipients should note that (i) the occurrence of any of the examples below is not necessarily a Material Action or Fact, as according to item
POTENTIALLY MATERIALACTION OR FACT, it is the ability to substantially influence (a) the quotation of securities issued by the Company or referred to them; (b) the decision of investors on buying, selling or maintaining those securities; or (c) the decision of investors of exercising rights inherent to the condition of holder of securities issued by the Company or referred to them; and (ii) the list contains only examples, it does not deplete or limit the possibilities of occurrence and characterization of a Material Action or Fact.
- a) signature of an agreement or contract for the transfer of the Company’s shareholding control, even if under suspensive or resolutive condition;;
- b) change in the Company’s control, including through the execution, alteration or rescission of a shareholders’ agreement;
- c) execution, alteration or rescission of a shareholders’ agreement, according to which the Company is a party or intermediator, or that has been registered in the Company’s own book;
- d) inclusion or exclusion of a partner that has entered into an operational, financial, technological or administrative contract or collaboration with the Company;
- e) authorization to trade securities issued by the Company in any domestic or foreign market;
- f) decision of canceling the registration as a publicly-held company;
- g) incorporation, merger or spin-off of the Company or related companies;
- h) transformation or wind-up of the Company;
- i) change in the Company’s equity;
- j) change in accounting criteria;
- k) renegotiation of debt;
- l) approval of the stock option plan;
- m) change in rights and benefits of securities issued by the Company;
- n) stock split, reverse split or stock grant;
- o) acquisition of Company’s shares to hold in treasury or cancel, as well as disposal of shares thus acquired;
- p) the Company’s profit or loss and allocation of cash proceedings;
- q) execution or extinction of a contract or unsuccess in its conduction, when expected outcome is known to the public;
- r) approval, change or withdrawal of project or delay in implementation;
- s) start, resumption or discontinuance of manufacturing or trading of product or service provision;
- t) discovery, change or development of technology or Company’s resources;/li>
- u) change in projections disclosed by the Company; and/or
- v) judicial or extra-judicial recovery request, requirement or acknowledgment of bankruptcy or lawsuit that may affect the Company’s economic-financial situation.
Recipients should keep absolute confidentiality about the Company’s business Material Action or Fact that has not been disclosed to the market.
While the Material Action or Fact is not disclosed, Recipients should promote restricted disclosure, when necessary to develop the business, always as confidential information and ensuring that every person with access to that information is aware that it is confidential and that its disclosure is limited, pursuant to the terms of this Disclosure Policy; joint responsibility is established, in accordance with Article 8 of Instruction 358, when confidentiality is not complied with by employee or reliable third party, for the Recipients that disclosed the information.
VI. Procedures Related to the Maintenance of Confidentiality
Recipients should take precautions to maintain information on undisclosed Material Action or Fact confidential.
When dealing with confidential or possibly material information, pursuant to the terms of item POTENTIALLY MATERIAL ACTION OR FACT yet undisclosed, Recipients should:
- immediately report it to the Investors Relation Officer, in accordance with item MAINTENANCE OF CONFIDENTIALITY TO THE BENEFIT OF THE COMPANY;/li>
- make sure that all documents related to this information circulate with confidentiality notice and/or restricted access and, also, that mail, either conventional or electronic, is addressed to reliable people that are aware that information is provided confidentially, in accordance with the Company’s standards on electronic mail security;
- forward to the Investors Relations Officer a list including name, position and function, if known, of people to which information was formally or informally provided; and
- immediately communicate the Investors Relations Officer about suspect or actual leak of information from its restrict and determinable circle.
VII. Direct Responsibility for the Disclosure of Material Action or Fact
The Investors Relations Officer is primarily responsible for the disclosure of Material Action or Fact.
The Investors Relations Officer should effectively comply with the disclosure of Material Action or Fact, immediately disclosing and communicating CVM and the markets in which securities issued by the Company are traded, in compliance with provisions of item MAINTENANCE OF CONFIDENTIALITY TO THE BENEFIT OF THE COMPANY.
VIII. Joint Responsibility for the Disclosure of Material Action or Fact
Recipients that are personally aware of a Material Action or Fact that should have been disclosed already are jointly responsible.
Complying with the procedure established in sub item (a) of item PROCEDURES RELATED TO MAINTENANCE OF CONFIDENTIALITY and when the omission of the Investors Relations Officer in disclosing the Material Action or Fact is verified by Controlling Shareholders, Management or Members, these should immediately warn other members of the Company’s Executive Board for them to analyze the possible disclosure without prejudice to the duty of informing the Material Action or Fact to CVM, in accordance with paragraph 2 of Article 3 of Instruction 358. The Company’s Executive Board will communicate to the Recipient, immediately and in written, about that resolution.
IX. Anomalous Situations
Recipients that are personally aware of undisclosed Material Action or Fact should pay attention to atypical fluctuations in shares’ quotations.
Whenever there is unusual fluctuation in quotation of securities issued by the Company, either in traded prices or quantities, the Investors Relations Officer will inquire internal people with access to material information to check whether they are aware of any matter liable to being disclosed to the market. Recipients that are personally aware of a Material Action or Fact should pay attention to any unusual fluctuation in quotation of securities issued by the Company and report to the Investors Relations Officer information necessary for its correct understanding, so that this information is able to, on its own, support a possible disclosure, in accordance with the terms of Instruction 358.
X. Maintenance of Confidentiality to the Company’s Benefit
Material Action or Fact should be immediately disclosed, unless maintaining it confidential is indispensable to preserve the Company’s legitimate interest.
The Material Action or Fact may exceptionally not be disclosed when Controlling Shareholders or Management understand that its disclosure will pose a risk to a legitimate interest of the Company, and the following should also be complied with:
- Controlling Shareholders or Managers that decide on maintaining confidentiality to the benefit of the Company should immediately and formally inform the Investors Relations Officer of the fact considered material and that should be maintained as confidential, providing the information necessary to its correct understanding so that this information is able to, on its own, support a possible disclosure, in accordance with the terms of Instruction 358.
- The Investors Relations Officer or the other Managers or Controlling Shareholders of the Company – provided that these two groups simultaneously communicate the Investors Relations Officer – may request that CVM analyze the necessity of maintaining confidentiality, provided that this is done in a sealed envelope addressed to the CVM President with a confidentiality warning. In case CVM decides that the Material Action or Fact should be disclosed to the market, it will determine to the interested person or the Investors Relations Officer, as applicable, its immediate communication to the stock exchange and the entity of the over-the-counter market in which securities are traded, and its disclosure as provided for in Article 3 of Instruction 358; and
- In any hypothesis of maintaining confidentiality on Material Action or Fact, and in face of situations that may be classified in item ANOMALOUS SITUATIONS or when the situation is out of the Recipients’ control, the Investors Relations Officer should be immediately informed to adopt the procedures provided for in item (b) above or immediately disclose the respective Material Action or Fact, without prejudice to Controlling Shareholders’ and Managers’ responsibility on disclosure.
XI. Holders of Securities Issued by the Company
Controlling Shareholders, Managers and Board members should inform the Company which are the holders and the trading by subsidiaries of securities issued by the Company.
Controlling Shareholders, Managers and Board members are obliged to inform to the Company which are the holders and the trading of securities, derivatives or any other securities referred to securities issued by the Company or issued by Subsidiaries or parent companies, provided that they are publicly-held companies. They should also communicate securities issued by these companies that are held (i) by the spouse from whom he/she is not legally separated; (ii) to the partner; (iii) to any dependent included in annual income tax return; and (iv) to direct or indirect subsidiaries.
Communication provided for in this item should be made on a monthly basis for the maximum period of 5 days after the end of each month, regardless of changes in any of the positions held, except: (i) upon investiture in the position, when communication should be made on the first business day after investiture; and (ii) to Managers and Members, when Securities are traded, when communication should be made within 5 days after the completion of each business. This communication should contain at least the following:
- Name and qualification, indicating the registration number in the Corporate Taxpayers Registry or the Taxpayers Registry;
- Number of shares per species and class and other features in case of other securities, in addition to the identification of the issuing company and position balance held before and after trading; and
- Acquisition or disposal forms, prices and dates of transactions.
XII. Responsability for the Disclosure of Information on Trading of Managers and Related People
The Investors Relations Officer is responsible for informing CVM on Trading conducted by Managers and Related People.
The Investors Relations Officer should transmit to CVM and the markets in which the trading of securities issued by the Company is allowed, information received by the Company in conformity with the provisions of Chapter XI above.
XIII. Asymmetrical Disclosure of Information
All Recipients are responsible for not disclosing Material Action or Fact on a privileged manner, even if in public or restricted meetings.
Previously to the disclosure of a Material Action or Fact through any communication means, including information to the press, or in union, investors, analysts or selected public meetings, inside the country or abroad, Recipients should contact and submit the material that is the object of the disclosure to the Investors Relations Officer, confidentially, and he/she will take the measures required to the simultaneous disclosure of information, if applicable.
XIV. On Crime Against the Capital Market
The use of information about undisclosed Material Action or Fact may be classified as crime, subject to imprisonment for a period of one to five years and fine.
Use undisclosed material information whose Recipients are aware of and that they should keep confidential and which is able to provide undue benefit to oneself or others, through trading of securities on one’s own behalf or on behalf of a third party is a practice classified as crime against the capital market, pursuant to the terms of Article 27-D of Law no. 6,385, of December 7, 1976, as amended by Law no. 10,303, of October 31, 2001, subject to imprisonment for a period of one to five years and fine of up to three times the amount of the undue benefit obtained as a result of the crime.
XV. Effectiveness and Changes – Changes to the Disclosure Policy will be Informed to Recipients.
As decided, the Disclosure Policy is effective as of December 18, 2007. The Company’s Board of Directors may, at any time, change current Disclosure Policy and, in this case, the Investors Relations Officer should immediately communicate the changes to Recipients, CVM, stock exchange and market entities in which securities issued by the Company are traded, and they are applied to all on communication date.
Annex – Terms of Compliance with the Information Disclosure Policy
I, [name and description], [function or position], declare that I have made myself aware of the terms and conditions of the Information Disclosure Policy of EDP ( EDP Energias do Brasil S.A. ), in compliance with the terms of CVM Ruling No. 358, of January 3, 2002 and approved by the Board of Directors of the company on December 18, 2007.
By signing this, I formally accept the company’s Information Disclosure Policy, and I hereby bind myself to comply with all its terms and conditions, adopting in situations of doubt the most conservative position possible.
Trading in securities issued by EDP Energias do Brasil S.A., or referred to them by potential or actual holders of relevant information under CVM Ruling No. 358, of 3 January 2002, as amended by CVM instructions no. 369 of June 11, 2002 and no. 449 of March 15, 2007.
EDP Energias do Brasil S.A.
The Company’s information disclosure policy was approved by the Board of Directors’ Meeting held on December 18, 2007.
Trading in securities issued by EDP Energias do Brazil S.A., or to which they are referenced, on the part of potential or effective holders of relevant information, under the terms of CVM instruction no. 358, of January 3, 2002, as amended by CVM instructions no. 369 of June 11, 2002 and no. 449 of March 15, 2007.
Approved by the Board of Directors of the Company at meeting held on December 18, 2007.
Trading securities policy issued by the company or to which they are referenced
I. Preamble of the trading policy and definitions
Pursuant to the terms of Law nº 6,404 of December 15, 1976, especially the provisions of paragraphs 1 and 5 of Article155, and regulation issued by the Brazilian Securities and Exchange Commission (CVM) with emphasis on Article 13 of Instruction 358, Controlling Shareholders, Managers, Board members and Former Managers are obliged to keep confidentiality on any undisclosed material information obtained as a result of their position and able to fairly influence the quotations of securities. It is prohibited to obtain, for oneself or others, advantages in the securities market.
In addition, Law no 6,385, of December 7, 1976, in its Article 27-D classifies as crime against the capital market the use of undisclosed material information by anyone who is aware of it and that should keep it confidential, able to provide to oneself or others, undue advantage in the trading of securities on one’s own behalf or on behalf of a third party.
In compliance with said provisions and considering that (i) the effective allocation of funds in a market economy requires the existence of a reliable and timely system; and (ii) that spontaneous market forces and the sum of private interests are not sufficient to ensure the existence of an effective information system, thus forcing the establishment of mandatory compliance with certain conduct standards, the Company hereby establishes some guidelines for the trading of securities of its issuance, or referred to them, by certain people, in conformity with the provisions of Article 15 of Instruction 358, as amended.
The purpose of adopting the Trading Policy is to establish specific parameters and limits for the trading of Securities by its recipients, maintaining, however, the absolute prohibition of using information on undisclosed Material Action or Fact to obtain, for oneself or others, advantages in the securities market.
|Controlling Shareholders||Company’s controlling shareholders, direct or indirect.|
|Advisory||provision of advisory, assistance or any type of consulting on investment in Securities.|
|Managers||members of the board of directors and executive board, acting on their own behalf or on the behalf of the Company.|
|Bovespa||São Paulo Stock Exchange.|
|Company||EDP Energias do Brazil S.A.|
|Members||Members of the supervisory board and of any bodies with technical or consulting functions that are created according to the bylaws.|
|CVM||Brazilian Securities Commission.|
|Trading Days||days in which there are shares trading sessions at Bovespa|
|Former Managers||managers that leave the Company’s management before the public disclosure of business or fact commenced during management period.|
|Material action or fact||any (i) decision of Controlling Shareholders; (ii) resolution of the shareholders’ meeting or Management meeting: or (iii) any other political-administrative, technical, business or economic-financial, or related to the business action or fact that may significantly influence on:
(a) the quotation of securities issued by the Company or referred to them;
(b) the decision of investors on buying, selling or maintaining those securities; or
(c) the decision of investors about exercising rights inherent to the condition of holder of securities issued by the Company or referred to them.
|Instruction 358||Instruction no. 358, issued on January 3, 2002, by CVM, as amended by CVM instructions no. 369, of June 11, 2002 and no. 449, of March 15, 2007.|
|People Subject to||a Company, Controlling shareholders, Managers.|
|Trading Restriction||Board members, Former Managers, Employees and/or Executives periodically listed by the Investors Relations Officer, at his/her own discretion, as People Subject to Trading Restrictions.|
|Trading Policy||current Securities Trading Policy.|
|Individual Investment Plan||individual plan containing intentions of People Subject to Trading Restriction for long term investments in Securities using their own funds, and filed in the Company’s head office pursuant to the terms of item V of the Trading Policy.|
|Associated Companies||Companies with 10% interest or more in the capital of one another without holding control.|
|Subsidiaries||Direct or indirect subsidiaries that qualify or will qualify as such, pursuant to the terms of Law no. 6,404, of December 15, 1976 (“Brazilian Corporate Law”).|
|Parent Companies||The Company, Controlling Shareholders, Administrators, Board Members, Former Administrators, Employees and/or Executives whom the Director of Investor Relations shall indicate, at his exclusive criteria, as being Subject to Restriction of Trades, as disclosed in a list published from time to time.|
|Securities||(i) any security issued by the Company, such as shares, debentures, promissory notes, subscription notes; and (ii) any security, contract or agreement referred to any security issued by the Company, such as derivative contracts and/or purchase options and future sales.|
II. Recipients of the trading policy
The Trading Policy affects, and requires adhesion in writing by: (i) Controlling shareholders; (ii) Managers; (iii) Members; (iv) Former Managers; and (v) Employees and executives that the Company’s Investor Relations Director may appoint, at his sole discretion, as Persons Subject to Restriction for Trading, in accordance with periodically disclosed listings.
The obligations foreseen in this Trading Policy are equally applicable to persons listed in the previous paragraph and linked to the Company’s parent companies and subsidiaries.
III. Trade prohibitions
The Persons Subject to Restriction for Trading are presumably holders of privileged information and may not trade with Securities (i) in disagreement with the Trading Policy and/or (ii) in several specific periods.
The People Subject to Restriction for Trading, except for Company board members and directors, and those of subsidiaries and affiliated companies, may not trade with securities in the fifteen-day period preceding the disclosure of the Company’s quarterly information (ITR form) and annual financial statements (DFP form). Company’s board members and directors as well as those of subsidiaries and affiliated companies, may only trade with securities in the fifteen calendar day period preceding the disclosure of the Company’s quarterly information (ITR form) and annual financial statements (DFP form) in cases of the provisions of Chapter VII of this Trading Policy.
Covered in the prohibitions of this Trading Policy is the trading performed directly or indirectly by Persons Subject to Restriction for Trading, defined as:
- Direct Trading: A trading with Securities occurring for the account of the Person Subject to Restriction for Trading or directly benefiting said person, such as those carried out in stock exchange or over the counter in which the final commitment lies with the Person Subject to Restriction for Trading;
- Indirect Trading: A trading with Securities that has as the indirect beneficiary the Person Subject to Restriction for Trading, such as those conducted by companies controlled by the Person Subject to Restriction for Trading, an exclusive investment fund of the Person Subject to Restriction for Trading or through third parties with whom a Person Subject to Restriction for Trading has a fiduciary agreement, a portfolio or share management agreement, except for the hypotheses of authorized trading, as described below.
IV. Authorized trading hypotheses
The prohibitions established in this Trading Policy do not apply:
- in the case where trading with Company’s securities is conducted by investment funds of which Persons Subject to Restriction for Trading are unit holders, provided that the investment fund are exclusive and the investment fund manager’s trading decisions are not influenced by the unit holders; and/or
- in transactions with Company treasury shares by private trading linked to the exercising of the purchase option in accordance with the plan for granting purchase options approved by the Company, and in repurchases of those shares by the Company also by private trading.
V. Trading by board members and directors
The Company’s board members and directors and those of subsidiaries and affiliated companies may acquire Securities issued by the Company in the fifteen (15) calendar-day period preceding the disclosure of quarterly information (ITR form) and annual financial statements (DFP form), provided that (i) the acquisition is made in conformity with the Individual Investment Plan; and (ii) the Company has approved a schedule of specific dates for disclosure of ITR and DFP forms.
VI. Rules related to trading policy
All Securities operations arising from Direct or Indirect Trading must observe certain limits.
The Persons Subject to Restriction for Trading who want to trade with Securities must expressly adhere to the Trading Policy by means of the Adhesion Agreement, whose form is the Attachment I hereto, and observe the following limitations:
- abstaining from trading Securities whenever so determined by the Investor Relations Director for the period established by him, regardless of presentation of justifications;
- abstaining from trading Securities if applicable and as long as there is observance of the provisions of Chapters IV and VII of this Trading Policy, when a reasonable time has not yet elapsed for the assimilation of the disclosed Material Action or Fact, assuming that a reasonable time will have elapsed (i) in relation to the disclosure of quarterly information (ITR) and annual information (DFP and IAN forms) when two (2) stock market days have elapsed counting from the date of disclosure of said quarterly information (ITR) and annual financial statements (DFP and IAN), including that date, or on the date of publication or availability of their information in the Periodical and Occasional Information System (IPE) of the Brazilian Securities Commission (CVM) and the São Paulo Stock Exchange (Bovespa), whichever occurs first; and (ii) in relation to the other hypotheses of disclosure of a Relevant Action or Fact, on the stock exchange day subsequent to the date of disclosure of the Relevant Action or Fact, including that date.
- not conducting trading with Securities privately, except if expressly authorized by the Investor Relations Director;
- (d) providing guidance and making the best efforts so that the (i) spouse or partner; (ii) descendant; and (iii) any other dependent included in the annual income tax return only trade Securities in the periods in which there is authorization to trade Securities; and
- (e) abstaining from trading Securities whenever the trading can interfere in the condition of related businesses, generating losses to shareholders or to the Company or its subsidiaries and affiliated companies, even if it is after the disclosure of the Material Action or Fact.
The Company will maintain in its main offices a list of those who sign the Adhesion Agreement with their particulars, position or function, address and corporate or personal federal tax enrollment number.
Whenever there are changes to the master file data, subscribers of the Adhesion Agreements must inform them immediately to the Company, in the person of the Investor Relations Director, who will update the list and keep it at the disposal of the Securities Commission (CVM).
The Adhesion Agreements must remain filed in the Company’s main offices as long as their signatories maintain a link to the Company and for at least five (5) years after their separation.
VII. Filing of the individual investment plan
The Company’s board members and directors, as well as those of subsidiaries and affiliated companies may only trade Securities within the fifteen calendar day period preceding the disclosure of the quarterly information (ITR form) and annual financial statements (DFP form), in accordance with Individual Investment Plans duly filed in the Company, with the observation of several requirements.
Company board members and directors, and those of subsidiaries and affiliated companies, who have their Individual Investment Plans duly filed in the Company in conformity with the specifications below, may trade with Securities within the fifteen (15) calendar day period preceding the disclosure of quarterly information (ITR form) and annual financial statements (DFP form), although they must observe all obligations listed in items III, IV and V above.
The Individual Investment Plan:
- may not be filed by the Company board members and directors, and those of subsidiaries and affiliated companies who have a personal knowledge of a Material Action or Fact not yet disclosed to the market, and within the fifteen (15) calendar days preceding the disclosure of ITR and DFP forms;
- must be filed thirty (30) days before the start of any trading with Securities by the Company board members and directors and those of subsidiaries and affiliated companies;
- will be established with a validity period of no less than twelve (12) months
- will establish the irrevocable and unconditional commitment by Company board members and directors and those of subsidiaries and affiliated companies to invest previously established amounts, indicating, on a monthly basis, (i) the volume of own funds they want to invest in Securities in the period; and (ii) the quantity, type, species and class, if any, of Securities that they intend to acquire in the period;
- will establish (i) the obligation of extending the commitment for purchasing the Securities, even after the end of the period originally foreseen for linking the Company board members and directors and those of subsidiaries and affiliated companies to the Individual Investment Plan depending on the Material Action or Fact not disclosed to the market and within the fifteen (15) days preceding the disclosure of the ITR and DFP forms; and (ii) obligation of Company board members and directors and those of subsidiaries and affiliated companies to revert to the Company any losses avoided or gains earned in trading with Company Securities arising from a possible change on the dates of disclosure of the ITR and DFP forms, calculated under reasonable criteria to be established in the Individual Investment Plan.
The Company board members and directors, and those of subsidiaries and affiliated companies, must hold the Securities acquired for at least ninety (90) days before making any other trading with those Securities, except for trading arising from (i) lending of Securities; or (ii) fully circumstantiated and justified situations with previous authorization by the Investor Relations Director.
Share subscriptions or acquisitions by exercising options granted by the Company under a Securities purchase option plan previously approved in a Company general shareholders’ meeting will be assumed to be included in the Individual Investment Plan, regardless of anticipation.
VIII. Prohibition of treasury share transactions
Trading by the Company with shares issued by itself are subject to the absolute prohibitions indicated in items (a) and (b) below.
The Company’s Board of Directors may not authorize trading of Company-issued shares in the following cases:
- (a) when any agreement or contract has been entered into for the transfer of the Company’s ownership control or an option or mandate for that purpose has been granted; and/or
- (b) if there is an intent to perform a combination, split-off, merger, transformation or reorganization of the Company and while it has not become public by the disclosure of a Material Action or Fact.
IX. Prohibition to the provision of advisory
The provision of advice by Persons Subject to Restriction for Trading, either for payment or free of charge, is restricted by this Trading Policy.
The provision of advice by Persons Subject to Restriction for Trading, either for payment or free of charge, should be limited to the periods in which the Persons Subject to Restriction for Trading have no knowledge of any information related to a not yet disclosed Material Action or Fact.
X. Binding period of former managers to current policy
Board members who have adhered to this Trading Policy and leave the Company must observe certain rules.
Board members who have adhered to the Trading Policy and leave the Company when a Material Action or Fact of a business occurred during their management must observe the limitations established by the Trading Policy (i) for six (6) months counting from their separation from the Company; or (ii) until the disclosure of the related Material Action or Fact, whichever occurs first.
XI. Disclosure and effectiveness of the trading policy
The Investor Relations Director shall take steps for immediate dissemination, control and monitoring of the Trading Policy, which will take effect and produce its regular effects as from this date.
All Persons Subject to Restrictions for Trading that might be benefited by the Trading Policy will be personally notified of the provisions herein.
Any changes to the provisions of the Trading Policy must be immediately informed to the adhering personnel by the Investor Relations Director.
The Trading Policy may not be approved or changed when there is a pending undisclosed Material Action or Fact. Exceptional situations involving Securities trading previously brought to the Investor Relations Director for consideration may be authorized, under legal and regulatory limits.
The Company’s Board of Directors, may, taking into account the period in which the above restriction will be in effect, make changes in this Trading Policy, and such changes will be promptly communicated by the Investor Relations Director to the Persons Subject to Restriction for Trading, and said Persons must expressly and in writing acknowledge the changes, and to the Securities Commission, the stock exchange and market entities in which the Securities are accepted for trading, and the changes will become applicable to each of them on the date of their acknowledgement of the changes.
Adhesion Term to the Trading Policy
I, [name and qualification], [function or position], hereby declare that I have taken notice of the terms and conditions of the Trading Policy of EDP Energias do Brazil S.A., in compliance with the terms of CVM Instruction No. 358, of January 3, 2002, and approved by the Board of Directors of the Company at a meeting held in December [-], 2007.
By signing this form below, I am formalizing my adhesion to the Company’s Trading Policy, committing myself to comply with all of its terms and conditions, and adopting in the case of doubt, the most conservative position possible.