The corporate governance model adopted by Cielo includes principles concerned with ethics, transparency, equity, accountability and corporate responsibility, essential for the sustainability of any business and in line with the best current corporate governance practices.

Cielo incorporated strict corporate governance standards into its values and daily business, voluntarily, which exceed the requirements of law, always ensuring the practice of ethical and sustainable conduct.

As Cielo believes that a solid governance model inspires greater confidence in the market under several aspects, one of the Company’s goals is the continued improvement in pursuit of the most advance governance level, aiming at maintaining a proper balance in the allocation of rights, powers, obligations and responsibilities amongst all the stakeholders, and, a result, maintain a healthy and efficient operation, thus, generating value in the long term.

Cielo adhered to the BM&F Bovespa’s “Novo Mercado” on June 29, 2009, bound to the Market Arbitration Panel, pursuant to the arbitration clause provided for in its Bylaws. It is worth pointing out that the listing in this segment implies to adopt a set of corporate rules, which enhance shareholders’ rights, besides a more transparent and comprehensive disclosure policy.

The Company’s American Depositary Receipts (ADRs), Level 1 have been traded since 2011 at the International OTCQX market, the US market premium segment, which recognizes major international companies of other securities traded in the US OTC market for the quality of their operational businesses, excellent disclosure of information and listing in qualified foreign stock exchanges.

For Cielo, the governance system optimization is one of the paths to achieve greater efficiency and add value to the Company, keeping the stakeholders’ confidence high.

In this regard, the main initiatives adopted by the Company to ensure a solid governance model are:

• The Board of Directors shall have three independent members, which is composed by a total of  11 members;
• The positions of Chairman of the Board of Directors and Chief Executive Officer shall be held by different persons, pursuant to the Company’s Bylaws;
• A Corporate Governance Department shall be created which will report to the Chief Executive Officer;
• Yearly carry out a self-evaluation of the Board of Directors, with mechanisms comprising a joint and individual approach, conducted by the Corporate Governance Department, with the participation and direction of the Corporate Governance Committee Coordinator (an independent member of the Board of Directors);
• Conduct a periodic external evaluation led by external consultant, directed by the Corporate Governance Committee Coordinator and supported by the Corporate Governance Department;
• A corporate governance electronic portal shall exist to restrict the exchange of information with members of the Board of Directors and Advisory Committees;
• Establish a fixed schedule of recurring issues to be discussed at the Board of Directors and an annual calendar or ordinary meetings of the Board of Directors, Fiscal Council and Advisory Committees;
• Implement a “Resolution Proposal” to clearly formalize the Board of Directors’ decision-making process;
• Determine the time estimated and monitor the time spent to discuss the issues of the agenda at the Board of Directos meetings, aiming at optimizing and ensuring the discussion of strategic issues in referred body;
• Be committed with diversity at senior management;
• Provide for governance guidelines of the Company and its aligned subsidiaries by means of corporate documents (Bylaws, Shareholders’ Agreements and Charters);
• Bi-annually periodically revise policies, rules and procedures;
• Provide handbook for shareholders’ attendance at meetings;
• Have a Code of Ethics, continuously improved by means of its employees’ contribution, which includes a set of business practices and procedures and relationship amongst employees, clients and suppliers, besides a specific Code of Ethics defining the guidelines for its suppliers’ professional conduct;
• Have an Ethics Channel which may be accessed by means of a specific Website or 0800 toll free number, operated by an independent company, which ensures confidentiality, and if desirable, – anonymity to those wishing to inform any deviation of conduct, whose coordination to check records is under the responsibility of the Internal Audit area, which is independent from the Company’s Board of Executive Officers, which reports all the activities related to the verification of denunciations received  until the conclusion of each case, monthly to the Audit Committee and half-yearly to the Board of Directors;
• Have a “Related Parties Transaction Policy and situations involving conflict of interests”, whose guideline is to ensure that the Company’s controlling shareholders do not take part a priori in decisions in which they can be benefited, composed of a set of rules which includes not only  prevailing laws providing for this issue, but also the best corporate governance practices.

Following carefully, without exceptions, this set of practices confers strength and reliability to Cielo in the long term.

Cielo’s Corporate Governance Department was created in 2014, an independent body, liable for (i) Cielo promoting the strict compliance with the best governance practices, (ii) ensuring the transparency of information provided to the Company’s governance bodies, (iii) ensuring the observance to the system adopted by the Company in the decision-making process, ensuring the interests and the quality of the Company’s decision-making process, contributing to its best performance and to reduce the risk of business.

The Company is managed (i) by the Board of Directors, composed of, at least, seven (7) and, at most, eleven (11) members elected by the General Meeting, with two-(2) year combined term of office, and reelection is authorized; and (ii) by the Statutory Board of Executive Officers, composed of, at least, two (2) and, at most, ten (10) members, one (1) Chief Executive Officer, one (1) Investor Relations Officer and up to eight (8) Officers without specific designation, elected by the Board of Directors, with two-(2) year term of office, and reelection is authorized. The Statutory Officers are authorized to cumulate positions, as resolved by the Board of Directors.

The Company’s Bylaws accepts the creation of technical and advisory committees, referred to as advisory committees or forums, which are supporting instruments to enhance the quality and efficiency of the Company’s management bodies performance, so that to maximize its value, always observing the principles and the best corporate governance practices.

The installation of Advisory Committees or Forums shall be incumbent upon the Board of Directors and/or Statutory Board of Executive Officers of the Company, where applicable, only the Audit Committee shall operate on a permanent basis.

Currently, the Company has the following committees and forums:

a) Board of Directors’ Advisory Committees: (i) Audit Committee; (ii) Risks Committee; (iii) Finance Committee; (iv) Corporate Governance Committee; (v) Personnel Committee; (vi) Sustainability Committee.

b) Statutory Board of Executive Officers’ Advisory Forums:(i) Diversity Forum; (ii) Disclosure Forum; (iii) Ethics Forum; (iv) Expenses Forum; (v) Social and Cultural Investment Forum; (vi) Price Forum; (vii) Products and Services Forum; (viii) Project Forum; (ix) Innovation Forum.

The competence, composition (including requirements and impediments applicable to members) and operation of Advisory Committees are provided for in the charters of each Committee, which were approved by the Company’s Board of Directors.

Likewise, the competence, composition (including requirements and impediments applicable to members) and the operation of Forums are provided for in the charters of each forum, which were approved by the Company’s Statutory Board of Executive Officers.

The Company’s Bylaws also provide for the eventual installation of a non-permanent Fiscal Council, an independent oversight body of the Statutory Board of Executive Officers and Board of Directors, with responsibilities and powers granted by laws. Since its operation is not permanent, the Company’s Fiscal Council may be installed by the General Meeting as requested by shareholders, in the assumptions provided for by laws.

Currently, the Company has a Fiscal Council, installed at the Annual General Meeting held on April 20, 2018.

Cielo’s shares are listed on the Novo Mercado segment, a segment of the stock exchange destined to the stock trading of companies which, voluntarily, adopt corporate governance practices additional to those required by Brazilian laws. The listing at this special segment implies the adoption of a set of corporate rules broadening shareholders’ rights, besides the adoption of more transparent and comprehensive information disclosure policy.

Amongst the voluntary practices assumed by Cielo, we highlight:

• Capital stock solely composed of voting right common shares;
• 100% tag along rule, i.e., in the event of a sale of control, all shareholders are entitled to sell their shares for the same price offered to controlling shareholder;
• The rule requiring a tender offer in the event of delisting or cancelation of agreement with BM&FBOVESPA, to buy back shares of all shareholders by economic value, at least;
• The Company shall provide in its bylaws that its board of directors is composed of, at least, two (2) independent board members – or twenty percent (20%), whichever is the greater, with a combined two (2)-year term of office, and reelection is authorized for members of its board of directors.
• Rule to maintain, at least, 25% of the outstanding shares (free float);
• Disclosure of complete financial information, including quarterly reports containing the cash flow statement and consolidated reports reviewed by an independent auditor;
• Availability of annual financial reports in the internationally accepted standard;
• Mandatory monthly disclosure of trades with securities issued by the Company by its officers, executives and controlling shareholders;
• Adhesion to the arbitration clause.

We strictly follow our related party transaction policy, which mandates that our controlling shareholders do not participate in decisions they can benefit from. An example was that the resolution on Cielo’s minority interest in Stelo was made solely by independent members of the Board, without participation of members representing Cielo’s controlling shareholders—namely Banco do Brasil and Bradesco—, which also control Stelo. Following the same principle, only independent members and Bradesco representatives voted on the creation of Cateno, after the association between Cielo and Banco do Brasil announced in November 2014.

Each year, Cielo conducts the formal performance assessment of its Board of Directors and its advisory committees, as joint decision-making bodies; the Chairman of the Board of Directors; the directors and members of advisory committees individually; the Executive Board; and the Governance Office (“Annual Assessment”), according to good corporate governance practices, and seeking continuous improvement of those bodies.

Methodology used in assessing the Board of Directors and main assessment criteria:

The Corporate Governance Office is responsible for conducting the Annual Assessment with the participation and guidance of the Corporate Governance Committee Coordinator, as well as for consolidating the responses and feedbacks received in the Annual Assessment, which are treated with full confidentiality. Only the Corporate Governance Office has access to the individual questionnaires, whose consolidated results are subsequently discussed within the scope of the Corporate Governance Committee and the Board of Directors.

Each year, the Corporate Governance Office submits an assessment questionnaire to the members of the Board of Directors, in order to analyze the performance of the various aspects of the Board of Directors and identify high-performance areas as well as those that require development of action plans, aiming at the continuous improvement of the works developed by the group and the executive areas of the Company.

The questionnaire comprises 55 questions that are rated by the directors on a scale from 1 to 5, and are divided into 5 dimensions: (1) strategic focus of the Board; (2) knowledge of and information on the business; (3) independence and decision-making process of the Board; (4) organization of Board meetings and committees; (5) motivation and alignment of interests. The consolidated score obtained for each question determines any differences in relation to good governance practices, and the opinion of directors about what would be an optimal situation. Based on the final report, the Corporate Governance Committee discusses the results of the Annual Assessment, and the improvement opportunities identified for development of action plans. The recommendations made by the Corporate Governance Committee are then submitted to the Board of Directors for approval and definition of implementation priorities.

Methodology used in assessing the Advisory Committees and main assessment criteria:

The Corporate Governance Office is responsible for conducting the assessment of the advisory committees with the participation and guidance of the Coordinator of each Committee, as well as for consolidating the responses and feedbacks received in the assessment, which are treated with full confidentiality. Only the Corporate Governance Office has access to the individual responses, whose consolidated results are subsequently discussed within the scope of each Committee.

The Questionnaire comprises on average 40 questions that are rated by the members on a scale from 1 to 5, and divided into 5 dimensions: (1) knowledge of and information on the business; (2) organization of meetings; (3) duties of the Committee; (4) motivation and alignment of interests; and (5) personal and professional relationships.

The consolidated score obtained for each question determines any differences in relation to good governance practices, and the opinion of directors about what would be an optimal situation.

Based on the final report, the Committee discusses the results of the assessment and the improvement opportunities identified for development of action plans. The main results of the assessment are then reported to the Board of Directors and, any recommendations that depend on the approval of the Board of Directors are submitted to said body for approval.

Methodology used in assessing the Executive Board and main assessment criteria:

Each year, the Executive Board conducts a formal performance assessment, whose model was formally approved at the meeting of the Executive Board held in July 2019.

The Corporate Governance Office is responsible for conducting the assessment of the Executive Board, as well as consolidating the responses and feedbacks received in the assessment, which are treated with full confidentiality. Only the Corporate Governance Office will have access to the individual responses, whose consolidated results are discussed subsequently.

The Questionnaire comprises […] questions that are rated by the members on a scale from 1 to 5, and divided into 5 dimensions: (1) knowledge of and information on the business; (2) organization of meetings; (3) duties of the Executive Board; (4) motivation and alignment of interests; and (5) personal and professional relationships.

The consolidated score obtained for each question determines any differences in relation to good governance practices, and the opinion of directors about what would be an optimal situation.  Based on the final report, the Executive Board discusses the results of the assessment and the improvement opportunities identified for development of action plans and priorities.

Methodology used in the External Assessment – External Consultants to the Board of Directors and the Executive Board, and main assessment criteria:

Additionally, each four years, the members of the Board of Directors and the Executive Board undergo a regular external assessment that is conducted by external consultants.

The external consultants conduct the external assessment under the guidance of the Corporate Governance Committee Coordinator and the Corporate Governance Office, and prepare the final report, whose results are discussed subsequently, within the scope of the Corporate Governance Committee.

The External Assessment methodology consists of: (a) individual interviews with the members of the Board of Directors and the Executive Board, to learn about the current context of the Company. (b) individual interviews with each director for a joint assessment, and assessment of the other directors. (c) online questionnaire for the members of the Board of Directors and the Executive Board; and (d) consolidation and preparation of final recommendations, with individual feedback and the feedback of the Board of Directors, and indication of the adjustments and/or improvements needed.

The final report gathers the conclusions on existing corporate governance processes and practices, and the internal opinions on improvement opportunities, as well as the recommendations made by the external consultants on the Company’s governance model and practices. Based on the final report, the Corporate Governance Committee discusses the results of the assessment and the improvement opportunities identified for development of the action plans. The recommendations made by the Committee are then submitted to the Board of Directors for approval and definition of implementation priorities.

Board of Directors Assessment Results

2015 – Click here to download Board of Directors Evaluation Results Report.

2016 – The members of the Board of Directors conducted the 2016 assessment in early 2017. However, the results and the action plan were not discussed because, when the results were prepared for presentation to the Board of Directors, this group had already changed its members (change in approximately 40% of members).

2017 – The members of the Board of Directors did not conduct the assessment for 2017, since the composition of the Board of Directors changed in January 2017 and, thus, the results would not reflect the consolidated position of the opinion of Board of Directors members who had taken office, regarding the topics of the Assessment (change in approximately 55% of members).

2018 – Click here to download Board of Directors Evaluation Results Report.