Policy for Related Party Transaction and Other Situations of Conflict of Interests

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Review History

Version: Date of Review: History:
1 04/17/2013 Preparation of the document.
2 06/19/2018 Update of the entire policy in accordance with the Company’s current guidelines.
3 07/31/2019 Change to items II. Scope, III. Guidelines, V. Responsibilities and VII. Concepts and Acronyms.
4 07/26/2021 Updated of the entire Policy in accordance with the Company’s current guidelines.
5 07/26/2023 Review and improvement to the wording of this Policy.
Update of items: I. Purpose, II. Scope, III. Guidelines subitems 1, 1.1.4, 1.1.5, 2.1.1, 2.1.2, 2.1.3, 2.1.6, 2.1.7, 2.1.8, 2.1.10, 2.2.2, 2.2.3, 2.2.5, 2.2.7, 2.4.1, 2.4.2, 4.1, 4.3, IV. Consequence Management, V. Responsibilities, VI. Supplementary Documentation and VII. Concepts and Acronyms.

 

I.   Purpose

To consolidate the procedures to be followed in business between Cielo S.A. – Instituição de Pagamento (“Cielo” or “Company”) and its Related Parties, as well as in other situations involving potential Conflict of Interest, providing transparency on these procedures to its shareholders and the market in general and ensuring their strict alignment with the interests of the Company, always in accordance with the best practices of Corporate Governance.

II. Scope

Applicable to the Company and all its Subsidiaries and Affiliates in Brazil and, insofar as applicable to companies abroad and subject to the legislation applicable to them, and must be observed by all its Members.

In addition to the rules applicable in this Policy, cross-border Related Party Transactions must comply with the transfer pricing tax rules, as provided for in the Company’s Tax Management Policy.

This Policy should be considered in conjunction with the Code of Ethics and the Company’s other Policies and Regulatory Instruments. In case of conflict of this Policy with other Normative Instruments of the Company, the Compliance and Anti-Money Laundering Management shall be consulted.

III. Guidelines

1. Related Parties / Related Party Transactions and Conflict of Interest

1.1. For the purposes of this Policy, the definition of “Related Parties” shall follow the definition provided for in CPC 05 (R1). As defined in CPC 05 (R1), the following individuals and/or legal entities are considered as Related Parties to Cielo:

1.1.1. that directly or indirectly, through one or more intermediaries:

  • are Controlling Shareholders of the Company;
  • are Controlled by the Company (subject to the exceptions provided for in this Policy);
  • hold Significant Influence over the Company;
  • are Affiliates of the Company or Affiliates of the Company’s Controlling Shareholder;
  • are Affiliates of a Person that is under common Control with the Company, for example, is Controlled by the Company’s Controlling Shareholder;
  • Subsidiaries, Controlling Companies or Affiliates with common administrators among themselves or with Cielo; and
  • Joint Venture in which the Company is a partner/shareholder.

1.1.2. that are post-employment benefit plans whose beneficiaries are the employees of the Company and of such entity;

1.1.3. who are Key Persons of the Company, its Controlling Shareholders or Company Subsidiaries;

1.1.4. who are Close Relatives of any of the persons referred to in this item 1.1;

1.1.5. who is any Person that, directly or indirectly, the individuals referred to in this item 1.1 Control, are Controlled by, exercise Significant Influence over, or hold voting powers;

1.1.6. who are Persons who maintain a relationship of economic and financial dependence with the Company and/or whose suppliers, customers or financiers maintain a relationship of economic and financial dependence with the Company.

1.2. Situations involving “Conflict of Interest” are potential conflicts of interest that arise when any Key Person is not in a situation of independence in relation to a given matter under evaluation and discussion and may influence, take, or cause the Company to take decisions motivated by particular interests or different from those of the Company, even if convergent with the interest of the Company.

1.3. “Related Party Transactions” are any transaction that results in the transfer of goods, rights, resources, services or obligations between the Company and/or its Subsidiaries, on the one hand, and a Related Party of the Company, on the other, regardless of whether a price is charged in return.

1.4. In case of conflict or uncertainty about the concept or scope of the definitions provided for in this Policy compared to the definitions contained in CPC 05 (R1), the rules of CPC 05 (R1) shall prevail.

2. Procedure for Approval of Related Party Transactions and/or Conflict of Interest Situations

2.1. Reporting and Deliberation Process on Related Party Transactions

2.1.1. The Requesting Area must report to the Executive Superintendence of Contracts, Corporate and Litigation any potential Related Party Transaction, regardless of the amount, which will analyze and express its opinion on the legal aspects related to the classification or not of said transaction as a Related Party Transaction. If its classification as a Related Party Transaction is confirmed, the Executive Superintendence of Contracts, Corporate and Litigation will inform Compliance and Anti-Money Laundering Board of the existence of the Related Party Transaction.

2.1.2. The Compliance and Anti-Money Laundering Board will request the Requesting Area to submit the necessary information, clarifications and documents so that it can express its opinion on whether or not this Related Party Transaction Policy is compliant.

2.1.3. The Requesting Area must submit to the Compliance and Anti-Money Laundering Board, in a timely manner, (i) the minimum information necessary to analyze the Related Party Transaction, according to its own procedure and/or as requested by the Compliance and Anti-Money Laundering Board, in addition to (ii) evidence and opinion of the manager in charge that there are clearly demonstrable reasons, from the point of view of the Company’s business, for the Related Party Transaction to be carried out, and (iii) proof that the terms of the proposed Related Party Transaction are at least equally favorable to the Company if compared to those available in the market or those actually offered or that could be contracted with a third party unrelated to the Company, in equivalent circumstances, when possible, as well as the information and documents provided for in items 2. 1.8 and 2.1.9, as applicable – if there are no comparable market terms, a duly substantiated justification must be presented with such information.

2.1.4. Transactions with Related Parties whose purpose is the financial investment of the Company’s own funds are subject to the provisions of the Financial Investment Standard and not to the provisions of this Policy.

2.1.5. Related Party Transactions carried out between the Company and any company whose capital, directly or indirectly, is wholly owned by the Company are not subject to items 2.1.2 and 2.1.3 of this Policy.

2.1.6. Related Party Transactions that are within the limits of the Executive Board’s authority, as approved by the Board of Directors, and that have as their object (i) the raising of funds, including, but not limited to, bank financing, bank credit note, credit opening, assignment and anticipation of receivables, and Leasing; as well as (ii) the opening of an account, membership or cancellation of an account service package and a ticket issuance contract; shall be forwarded to the Compliance and Anti-Money Laundering Management within five (05) business days from the signing of the respective contract.

2.1.7. After the manifestation of the Compliance and Anti-Money Laundering Management, the Executive Superintendence of Contracts, Corporate and Litigation shall activate the Corporate Governance Area of the Company, according to the rules set forth in the Internal Regulations of the Governance Committee and in the Bylaws, so that it may convene an extraordinary meeting of the Corporate Governance Committee, in which the manager of the area requesting the Transaction will present the business and its rationale.

2.1.8. For Transactions submitted to the Corporate Governance Committee, the manager of the requesting area must submit documentation demonstrating that the respective Related Party Transaction will be carried out under equitable conditions in relation to those practiced by the market and in the best interest of Cielo, such as, but not limited to, commercial proposals that have been effectively obtained from independent third parties and market research on prices and other conditions in similar operations.

2.1.9. Notwithstanding the submission of this documentation, in cases where the Corporate Governance Committee deems it necessary, the manager of the Requesting Area must submit an independent study, report or appraisal report prepared without the participation of any party involved in the Related Party Transaction, be it a bank, lawyer, specialized consulting firm, among others, based on realistic assumptions and information endorsed by third parties, regarding the commutativity of the terms of the Related Party Transaction.

2.1.10. After the recommendation of the Corporate Governance Committee, the Transaction will be submitted to the Board of Directors for resolution, and the proposal for resolution must be instructed with all the documentation pertinent to the transaction under the terms set forth herein, in addition to containing the opinion of the Executive Superintendence of Contracts, Corporate and Litigation.

2.2. Performance of the Corporate Governance Committee, the Board of Directors and the General Shareholders’ Meeting

2.2.1. Related Party Transactions, as well as issues related to potential Conflict of Interest involving or not Related Parties, should be directed to the Corporate Governance Committee so that, through assumptions, filters and mechanisms defined below, it recommends the subject or not for the deliberation of the Board of Directors.

2.2.2. The Corporate Governance Committee and the Board of Directors will evaluate the contracts or transactions with the Controlling Shareholders, after the manifestation of the Executive Superintendence of Contracts, Corporate and Litigation and the Compliance and Money Laundering Prevention Management, under the terms above, which are within their competence as determined by item (xxiii) of Article 19 of Cielo’s Bylaws, except those related to standardized banking products.

2.2.3. All transactions carried out between Related Parties must be the subject of a half-yearly report submitted by the Executive Superintendence of Contracts, Corporate and Litigation to the Corporate Governance Committee.

2.2.4. The Board of Directors shall have access to all documents relating to the Related Party Transactions, including any technical opinions or opinions, which the appropriate body has received, as well as to its own analysis. The Corporate Governance Committee shall define the content and format of the information deemed necessary for the resolution of the Board of Directors regarding a Related Party Transaction (subject to the provisions of this Policy), which will be distributed together along with the call notice for the meeting at which the transaction will be submitted for analysis.

2.2.5. Notwithstanding the provisions of item 2.2. 4, prior to the approval of Transactions with Related Parties or guidelines for their contracting, if the internal documentation related to the Transaction (a) does not include market alternatives, and/or (b) indicates that it is not on equitable terms in relation to those practiced by the market and/or that it is not carried out in the best interest of the Company, then (i) the Corporate Governance Committee shall assess the convenience of requesting the Requesting Area to present market alternatives to the Transaction; and (ii) if the Corporate Governance Committee does not do so and recommends the Transaction for approval by the Board of Directors, it shall justify the reasons why it did not consider such market alternatives necessary. If, due to the characteristics or subject matter of the Transaction, there are no comparable market terms, a duly substantiated justification with such information should be provided.

2.2.6. The Board of Directors shall attempt to ensure that corporate restructurings involving the Company and its Related Parties ensure equitable treatment for the Company and its shareholders.

2.2.7. If a Related Party Transaction falls within the scenarios that article 122, item X, of the Brazilian Law of Corporations defines as the exclusive competence of the General Shareholders’ Meeting, the Board of Directors shall submit such Transaction to the Company’s General Shareholders’ Meeting with its recommendation on the matter.

2.3. Transactions with Controlling Shareholders

2.3.1. The Corporate Governance Committee, when evaluating proposals for Related Party Transactions carried out between the Company and any of its Controlling Shareholders, shall be composed, on an exceptional basis, of all independent directors, and the said independent directors shall be summoned to consider the matter as ad hoc members of the Committee, replacing the member(s) appointed by the conflicted Controlling Shareholder(s), in addition to the members of the Committee, even if appointed by the Controlling Shareholder(s) who are not conflicted.

2.4. Reporting Conflict of Interest Situations

2.4.1. If a Key Person identifies the possibility of participating in a decision-making process related to any matter in which he/she is in a situation of potential Conflict of Interest, the Key Person must, as soon as the conflict is verified or becomes aware of it, inform the members of the competent body for the deliberation of such matter, as well as the Executive Superintendence of Contracts, Corporate and Litigation and Corporate Governance, so that the latter may report to the Corporate Governance Committee for a response.

2.4.2. A Key Person in a position of conflict (i) a priori, will not participate in the meetings or, (ii) if present due to other matters on the agenda, must leave during discussions on the subject and refrain from voting in deliberation on, negotiating, evaluating, opining on, or in any other way participating in or influencing the conduct or approval of the matter. If requested by the Chairman of the Board of Directors or the Chief Executive Officer, as the case may be, the Key Person may partially participate in the discussions, in order to provide them with more information about the operation and the parties involved, but must always be absent at the end of the discussion, including and especially from the voting process of the matter. The absence of voluntary response by a Key Person regarding their position of Conflict of Interest will be considered a violation of this Policy, and such behavior should be brought to the attention of the Corporate Governance Committee and, subsequently, to the Board of Directors, which shall evaluate the appropriate measures to be taken.

2.4.3. The member(s) appointed by the Controlling Shareholder(s) who are not in a position of Conflict of Interest shall also not participate in the meetings of the Board of Directors or the Corporate Governance Committee when the matter to be deliberated refers to a strategic issue of the conflicted shareholder.

2.4.4. Documents related to Related Party Transactions shall not be made available to members of the Corporate Governance Committee and/or Board of Directors who are connected to the Related Party involved in the Transaction, except in cases where a majority of the members of the Company’s Board of Directors (excluding the member(s) of the Company’s Board of Directors who is not in a Conflict of Interest position) determines that making such documents available is in the best interest of the Company.

2.4.5. If a Key Person who may have a Conflict of Interest fails to respond, any third party, including another member of the body to which the Key Person belongs and who has knowledge of the situation may do so, and the competent body will then assess such situation collectively.

2.4.6. The response to any situation of potential Conflict of Interest and the consequent abstention from the exercise of voting rights by the Key Person shall be included in the minutes of the meeting of the respective body.

3. Prohibited Transactions

3.1. The following Related Party Transactions are prohibited:

3.1.1. Transactions carried out under non-commutative conditions in such a way as to harm the Company’s interests;

3.1.2. The direct granting of loans by the Company to Related Parties as defined above, as well as:

  • To directors, including the chairman and vice-chairman(s), and members of the Fiscal Council or Board of Directors or their advisory committees, as well as to their spouses, partners, descendants or descendants of their spouses or partners;
  • To relatives up to the 2nd degree of the persons mentioned above;
  • In favor of Persons holding an equity stake greater than ten percent (10%) in the Company, unless specifically authorized by the Central Bank of Brazil, in each case, in the case of operations backed by commercial effects resulting from purchase and sale transactions or pledge of goods, within limits that are set by the National Monetary Council, on a general basis; and
  • In favor of Persons in which any managers of the Company, as well as their spouses, partners, descendants or descendants of the respective spouses or partners and their relatives up to the 2nd degree hold a stake greater than 10% (ten percent).

3.1.3. Managers and employees holding equity stakes or engaging in a private or personal business that interferes or conflicts with the interests of the Company or that results from the use of confidential information obtained due to the exercise of the position or function they hold in the Company; and

3.1.4. Forms of compensation of advisors, consultants or intermediaries that generate Conflict of Interest with the Company, the Managers or the Controlling Shareholders.

4. Obligation to Disclose Related Party Transactions

4.1. For the purposes of disclosing the Financial Statements and information contained in the Reference Form filed with the CVM, as well as in the disclosure of Notices on Related Party Transactions, the Company is required to disclose Related Party Transactions, in accordance with applicable laws and regulations, in particular Article 247 of the Brazilian Law of Corporations, CVM Resolution 94, and CVM Resolution 80, as amended.

4.2. In any disclosures required by applicable law or regulation, Cielo shall, subject to the condition established by CPC 05 (R1), provide sufficient details to identify the Related Parties and the essential conditions inherent in the Related Party Transaction, in order to allow the Company’s shareholders to exercise the right to know, supervise and monitor the Company’s management acts, as well as having information necessary for the assessment of opportunities and risks arising from its operations, without prejudice to the duty of its wide disclosure to the market when the operation constitutes a material fact or when the financial statements are disclosed.

4.3. In compliance with CVM Resolution 80, the Company must keep its Reference Form updated with information on Related Party Transactions and, where applicable, make the disclosure required under Exhibit F of said Resolution.

IV. Consequence Management

Violations of the provisions of this Policy will be referred to the Corporate Governance Committee, which will analyze and recommend to the Board of Directors the adoption of appropriate sanctions, which may result in disciplinary action for any Member(s) involved.

Employees, suppliers or other stakeholders who observe any deviations from Conflict of Interest guidelines may report the fact to the Ethics Channel through the channels below, with the option of anonymity:

Failure to comply with the guidelines of this Policy gives rise to the application of accountability measures for agents who fail to comply with it, according to the respective severity of the non-compliance.

V. Responsibility

  • Managers, Controlling Shareholders and other Members of Cielo

    • To observe and ensure compliance with this Policy and, when necessary, to engage the Executive Superintendence of Contracts, Corporate and Litigation and/or the Corporate Governance Committee for consultation on situations involving conflict with this Policy or in the event of any of the situations described therein, including Conflict of Interest.
  • Requesting Areas

    • Report to the Executive Superintendence of Contracts, Corporate and Litigation any potential Related Party Transaction.
    • Engage and provide information, clarifications and necessary documents, as provided for in this Policy, so that Related Party Transactions and/or situations involving Conflict of Interest are submitted to the Company’s governance bodies and evaluated by such bodies for resolution, as established in items 2.1.1 and 2.1.3.
  • Executive Superintendence of Contracts, Corporate and Litigation

    • Comply with the guidelines established in this Policy, keep it updated in order to ensure that any changes in Cielo’s direction are incorporated into it and clarify doubts regarding its content and application, as well as assess the need for updates to the Policy due to changes in the rules applicable to the Company and/or its Subsidiaries.
    • As established in item 2.1.1, report any Related Party Transaction informed by the Requesting Area to the Compliance and Anti Money Laundering Board.
    • Comment on legal aspects regarding the framework of Related Party Transactions and/or situations involving Conflict of Interest, as provided for in item 2.1.1.
    • Act to ensure that Related Party Transactions or situations involving Conflict of Interest are clearly reflected in the Reference Form, in accordance with current laws and regulations.
  • Compliance and Anti-Money Laundering Board

    • Comment, after the Executive Superintendence of Contracts, Corporate and Litigation has done so, on Related Party Transactions and/or situations involving Conflict of Interest, as provided for in item 2.1.2.
    • If necessary, request the Requesting Area to submit additional information, clarifications and documents so that it can comment on the Related Party Transaction.
  • Corporate Governance Committee

    • Evaluate, prior to the Board of Directors’ assessment, and comment on, pursuant to item 2.2.1 of this Policy, the adequacy of Related Party Transactions and/or situations involving Conflict of Interest, as provided for in the Company’s Bylaws and in this Policy, recommending whether or not they should be carried out.
    • Evaluate, prior to the assessment of the Board of Directors, and issue a recommendation on the proposals for changes in the content of this Policy and propose improvements to its rules.
    • Act to ensure that Related Party Transactions or situations involving Conflict of Interest: (i) are formalized and documented, specifying their main characteristics, including the possibility of termination, by the Company, of any Related Party Transaction that is successive, under conditions equivalent to those that could be contracted with independent parties; and (ii) are carried out at prices, terms and rates customary in the market or in previous negotiations, when possible, which represent equitable conditions in relation to those practiced by the market and in the best interest of Cielo.
    • Monitor the management of Directors, Superintendents and other Members in relation to the adoption of measures aimed at ensuring that Related Party Transactions comply with the specific rules dedicated to them in corporate law, applicable regulations and this Policy.
  • Accounting Board

    • Act to ensure that Related Party Transactions or situations involving Conflict of Interest are clearly reflected in the financial statements and that the reflection of these disclosures is applied to the Reference Form, in accordance with current legislation and regulations.
  • Board of Directors

    • After the recommendation of the Corporate Governance Committee, deliberate on Related Party Transactions within certain value criteria, as provided for in the Company’s Bylaws and in item 2.2.1 of this Policy, except for the hypotheses whose approval is the exclusive competence of Cielo’s General Shareholders’ Meeting, under the terms of the Company’s Bylaws or the Brazilian Law of Corporations.
    • Deliberate on proposed changes to the content of this Policy.
    • Convene, as the case may be, an Extraordinary General Meeting of Shareholders of Cielo to resolve on the execution of Transactions with Related Parties that are the competence of the shareholders, under the terms of the Company’s Bylaws or the Brazilian Law of Corporations, providing its recommendation on the matter on the call notice.
  • Cielo’s General Shareholders’ Meeting

    • Resolve on the execution of Related Party Transactions that fall within its exclusive competence under the terms of the Company’s Bylaws or the Brazilian Law of Corporations.

VI. Supplementary Documentation

  • Law No. 6404, dated December 15, 1976, as amended (“Brazilian Law of Corporations”);
  • CVM Resolution No. 80, dated March 29, 2022, as amended (“CVM Resolution 80”)
  • Technical Pronouncement CPC 05 (R1) of the Accounting Pronouncement Committee – CPC on disclosure of related parties (“CPC 05”) approved by the Brazilian Securities and Exchange Commission pursuant to Resolution No. 94/22 (“CVM Resolution 94”) and by the Central Bank of Brazil pursuant to CMN Resolution No. 4,818/20 and BCB Resolution No. 2/20
  • Novo Mercado listing regulations of B3 S.A. – Brasil, Bolsa, Balcão (“Novo Mercado Regulation”)
  • Company Bylaws;
  • Internal Regulations of the Board of Directors
  • CInternal Regulations of the Corporate Governance Committee
  • Company Tax Management Policy
  • Company Code of Ethics;

VII. Concepts and Acronyms

  • Controlling Shareholder(s): shareholder or group of shareholders bound by shareholders’ agreement or under joint control that exercises direct or indirect control over the Company, pursuant to the Brazilian Law of Corporations.
  • Directors: members of the Board of Directors and the Statutory Executive Board.
  • Requesting Area: the area requesting and/or intending to engage in a Related Party Transaction.
  • Affiliate Company: the entity over which the investor has Significant Influence.
  • Control (including the terms and expressions of corresponding meanings, such as Subsidiary(ies) or Subsidiary Company(ies), “under common control” and “Joint Control”): pursuant to Section 116 of the Brazilian Corporation Law, the ownership of rights that, directly or indirectly through other Subsidiaries, ensure to the holder thereof, on a permanent and effective basis, the power to direct the management and to set the guidelines of a particular Person, as well as the power to elect a majority of its administrators, either (i) by owning more than 50% of the voting capital of such Person; (ii) by exercising the right to elect a majority of the board members and/or officers of such Person or, if the Person is an investment fund, to appoint its manager or, in the case of funds without a manager or in which the manager accumulates the functions, its administrator; (iii) by agreement; or (iv) in any other way. The control can be full or shared.
  • CVM: the Brazilian Securities and Exchange Commission.
  • Significant Influence: the power to participate in the financial and operational decisions of an entity, but that does not necessarily characterize control over these policies. Significant Influence can be obtained through ownership interest, statutory provisions, or a shareholders’ agreement. When an investor directly or indirectly holds twenty percent or more of the voting power of an investee, it is presumed to have significant influence, unless it can be clearly demonstrated otherwise. The existence of significant influence may also be evidenced in one or more of the following ways: (i) representation on the board of directors or executive board of the investee; (ii) participation in policy-making processes, including in decisions about dividends and other distributions; (iii) material transactions between the investor and the investee; (iv) exchange of directors or managers; (v) provision of essential technical information.
  • Member: administrator/employee working at Cielo or its Subsidiaries at all levels, including Directors, officers, employees, interns and apprentices (as applicable in geographic locations).
  • Close Relative: family members who can be expected to exert influence or be influenced by the person in those members’ dealings with the entity and include: (i) the children of the person, spouse or partner; (ii) the children of the spouse of the person or partner; and (ii) dependents of the person, his/her spouse or partner.
  • Person: any individual or legal entity, as well as any unincorporated entity, including Government Authorities, associations, trusts, partnerships, investment funds, joint ventures, consortiums, condominiums, de facto corporations, silent partnerships, or any other entity with or without legal personality.
  • Key Person: individuals with the authority and responsibility for directly or indirectly planning, overseeing and controlling the entity’s activities, including any administrator (executive or otherwise) of that entity, and in the case of Cielo and its Subsidiaries will be considered Key Persons the members of the Board of Directors, the Statutory Executive Board or administrator of the Controlling Shareholder(s) who effectively have the power to influence the business and decisions of the Company.

VIII. General Provisions

The Company’s Board of Directors is responsible for altering this Policy whenever necessary.

This Policy takes effect on the date of its approval by the Board of Directors and revokes any documents to the contrary.