Corporate Governance Policy
|Version:||Date of Review:||History:|
Consolidating the principles and practices of corporate governance adopted by Cielo S.A. (“Company”) and its commitment to adopt the best practices of corporate governance, using as reference the Code of Best Practices of Corporate Governance and the Brazilian Code of Corporate Governance – Publicly Held Companies, in addition to disclosing its Corporate Governance System and helping strengthen the transparency of its management, with the purpose to align the interests of its shareholders and other stakeholders.
This corporate governance policy (“Policy”) applies to all Governance Agents involved in the Company’s Corporate Governance System.
All of the Company’s Subsidiaries must establish their directives based on the guidance provided in this Policy, considering the specific needs and legal and regulatory aspects to which they are subject.
Regarding the Affiliated Companies, the Company’s representatives working in the Management of Affiliated Companies should make efforts to set their directive based on the guidance provided for in this Policy, considering the specific needs and legal and regulatory aspects to which they are subject.
The Corporate Governance System adopted by the Company has transparency, equity, accountability and corporate responsibility as its guiding principles, which, when converted into corporate governance practices, allow the improvement of the management, the harmonization of interests, the sustainability of the business and the generation of value for the Company’s perpetuity.
1. 1 Transparency is the Company’s desire to make available, to its shareholders, employees and other stakeholders, information of their interest and not only that information with the disclosure required by applicable laws or regulations.
1.2 Equity is the Company’s desire to treat all its shareholders, employees and other stakeholders fairly and equally, considering their rights, duties, needs,
interests, and expectations.
1.3 Accountability is the duty of Governance Agents to be accountable for their work in a clear, concise, understandable and timely manner, assuming the
consequences of their acts and omissions, acting with diligence and responsibility.
1.4 Finally, corporate responsibility is the duty of Governance Agents to ensure the Company’s economic and financial feasibility, reduce the negative externalities of its business and operations and increase the positive externalities.
2. Corporate Governance Structure
2.1 The Company is managed by the Board of Directors and the Executive Board, as provided for in its Bylaws.
2.1.1 Board of Directors
22.214.171.124. The Company’s Board of Directors will have at least 7 (seven) members and at most 11 (eleven) members, elected by the Shareholders’
Meeting, with a unified term of 2 (two) years. The reelection is allowed. At least two (2) members of the Board of Directors or twenty percent (20%) of all members of the Board Members, whichever number is higher, must be Independent Board Members, as set forth in Novo Mercado’s Rules. The election of the independent Board Member must comply with the provisions of Article 141, Paragraphs 4 and 5 and Article 239 of Law 6404/76.
126.96.36.199. The Bylaws and the Charter of the Board of Directors 6 govern the structure, powers & duties, operating rules, responsibilities, as well as the
measures to be adopted in situations of conflict of interest.
2.1.2 Advisory Committees
188.8.131.52 The Board of Directors has established the following Advisory Committees: (a) Audit Committee – statutory and permanent with operational autonomy and its own budget approved by the Board of Directors; (b) Finance Committee; (c) Corporate Governance Committee; (d) People Committee; (e) Risk Committee; (f) Sustainability Committee..
184.108.40.206 The Company’s Advisory Committees are coordinated by independent Board Members and preferably have, in its structure, members of
the Board of Directors.
220.127.116.11 The Charter of the Advisory Committees 7 provides on the structure, powers & duties, operating rules, responsibilities, as well as the measures to be adopted in situations of conflict of interest.
18.104.22.168 The Company will disclose, every six months, a summary report of the Audit Committee, to be presented with its income statements, including the meetings held and the main subjects discussed, highlighting the recommendations made by the said committee to the Company’s Board of Directors.
2.1.3 Executive Board
22.214.171.124 The Executive Board will have at least 2 (two) members and at most 10 (ten) members, with one CEO, one Investor Relations Officer and up
to 8 (eight) executive officers without specific designation (jointly, “Executive Officers”), elected by the Board of Directors and as indicated by the Chief Executive Officer.
126.96.36.199 The Bylaws and the Charter of the Executive Board 8 provide on the structure, powers & duties, operating rules, responsibilities, as well as the measures to be adopted in situations of conflict of interest.
2.1.4 Advisory Forums
188.8.131.52 The Executive Board has the following Advisory Forums: (a) Diversity Forum; (b) Disclosure Forum; (c) Ethics Forum; (d) Expense Forum;
(e) Innovation Forum; (f) Social and Cultural Investment Forum; (g) Project Forum; (h) Pricing Forum; (i) Products and Services Forum.
184.108.40.206 The Charters of the Advisory Forums provide on the structure,powers & duties, operating rules, responsibilities, as well as the measures to be adopted in situations of conflict of interest.
3. Supervision and Control
3.1 Fiscal Council
3.1.1 The Company’s Fiscal Council is not permanent, with the duties and powers set forth by the law and is installed by resolution of the Shareholders’ Meeting or at the request of the shareholders, in the cases provided for by law.
3.1.2. When installed, the Fiscal Council will have three (3) to five (5) sitting and alternate members, in equal number, elected by the Shareholders’ Meeting.
3.1.3. The Bylaws and the Charter of the Fiscal Council provide on the structure, powers & duties, operating rules, responsibilities, as well as the measures to be adopted in situations of conflict of interest.
3.2. Internal Audit
3.2.1. The purpose of the Company’s Internal Audit is to provide independent, autonomous and impartial opinions on the quality and effectiveness of the risk management systems and processes, internal controls, and corporate governance, identifying deviations and appropriate measures, recommending improvements focused on protecting the interests of the Company and of the shareholders. The Company’s Internal Audit has an adequate structure and budget to carry out its assignments, as assessed and approved by the Company’s Board of Directors.
3.2.2. The auditors report to the person responsible for the Internal Audit, who reports to the Board of Directors, with technical support from the Audit Committee.
3.2.3. The Company’s Internal Audit Policy provides for the work of the Internal Audit in the Company’s processes and guidelines to hire extra-audit services.
3.3. Corporate Risk Management and Internal Controls
3.3.1. The Company has a Policy on Corporate Risk Management and Internal Control focused on establishing the main guidelines and processes related to the management of corporate risk and internal controls, and, in each case, those responsible for identifying, assessing and monitoring risks related to the Company and its segments, in compliance with regulations, applicable standards and good market practices.
3.3.2. The Company’s Risk Committee has the purpose to advise the Board of Directors when carrying out its duties related to the management of risks and the minimum equity requirements applicable to the Company.
3.3.3. The Company ensures the independence of risk management activities, including through segregation between the operational area and the risk management, pursuant to Article 8, Sole Paragraph, item “III”, of Official Letter 3681/2013 of the Central Bank of Brazil.
3.4. Management and Rules on the Decision-Making Process regarding Related Parties and/or Situations with Conflict of Interest
3.4.1. The Company has a Policy on Transactions with Related Parties and other Situations of Conflict of Interest, which consolidates the procedures and criteria to be observed in the Company’s business involving related parties and other situations involving potential conflict of interest, as well as guidelines to verify possible situations involving related parties and conflict of interest regarding the precepts of the policy.
3.4.2. Transactions with Related Parties, as well as issues related to Conflicts of Interest with Related Parties or not, should be sent to the Corporate Governance Committee. Such Committee may refer the matter to the Company’s Board of Directors, according to the criteria set forth in the Policy on Transactions with Related Parties and other Situations of Conflict of Interest.
3.4.3 When transactions with related parties involve the Company and any of its controlling shareholders: (a) the Corporate Governance Committee will exceptionally have only independent members, who will be convened to evaluate the matter as ad hoc members of the said Committee, replacing the member(s) appointed by the said controlling shareholder(s), in addition to non-conflicting Committee members; and (b) the members of the Board of Directors in a position of conflict (i) a priori, will not attend the meetings or (ii) if they attend the meeting due to other matters, they shall abstain from the discussions on the matter and abstain from voting in the resolution. If requested by the Chairman of the Board of Directors or by the CEO, as the case may be, such members may be partially part of the discussions, to subsidize such discussions with further information on the transaction and parties involved; however, such members must always leave the meeting at the end of the discussion, not staying during the voting procedure.
3.4.4 In the same way, when the matter to be resolved refers to the strategic issue of the conflicting shareholder, the meetings of the Board of Directors or Corporate Governance Committee will be attended by the member(s) appointed by the controlling shareholder(s) who are not in a position of conflict of interest.
3.4.5 All transactions between Related Parties will be the subject of a half-yearly report submitted to the Company’s Corporate Governance Committee.
4. Corporate Governance Management
4.1. Corporate Governance Office:
4.1.1. On February 26, 2014, the Company’s Board of Directors established the Corporate Governance Office. The position of governance secretary is occupied by a professional reporting to the Company’s Board of Directors.
4.1.2. The Company’s Board of Directors ensures the autonomy of the Corporate Governance Office so that it may act impartially with respect to any individual or collective interest, focusing on governance guidelines, best practices in situations with related parties and/or conflicts of interest. The office may also propose and/or implement processes to promote best practices of corporate governance, which are key to add value to the Company.
4.1.3. The Corporate Governance Office is responsible for the following: (a) acting as secretary and organizing the meetings of the Company’s Governance Bodies; (b) articulating with the members of the Governance Bodies and other Governance Agents involved in the Company’s Corporate Governance System; (c) fostering the continuous improvement of the Company’s Corporate Governance System, as well as proposing adjustments to the said system, with the purpose of adopting the best corporate governance practices; (d) ensuring the implementation and/or maintenance of processes that promote and support the Company’s Corporate Governance System; (e) ensuring the compliance, by Governance Agents, with the decision-making process adopted by the Company, ensuring the speed (with quality) of the decision-making process; (f) preparing and revising the documents related to the corporate governance of the Company, keeping them up to date with the highest standards of corporate governance; (g) ensuring the implementation of the annual performance evaluation of the Company’s Board of Directors and its Advisory Committees, as well as the evaluation of the Board of Directors to be carried out by the external advisory firm, at the frequency defined by the Board, as well as assessing the results, proposing action plans and monitoring the implementation of the action plans resulting from the evaluations of the said bodies; (h) managing the Company’s Corporate Governance Portal; (i) ensuring the implementation and continuous improvement of the onboarding of the new members of the Board of Directors; (j) carrying out the assignments set forth in the above items for the Company’s Subsidiaries, as applicable.
4.2. Management of Interests in Subsidiaries and Affiliated Companies:
4.2.1 The Company has a department focused on managing and monitoring its interests (“Management of Affiliates”) in Subsidiaries and Affiliated Companies (“Cielo’s Investees”).
4.2.2 The main responsibilities of the Management of Affiliates are as follows: (a) ensuring the implementation of a Corporate Governance System in Cielo’s Investees, observing the best practices of corporate governance, as well as monitoring the implementation and maintenance of the corporate governance practices adopted by said companies; (b) making the best efforts to ensure that Cielo’s Investees implement institutional policies, which must follow the guidelines set forth in the Company’s institutional policies, observing the specific needs and legal and regulatory aspects to which they are subject; (c) monitoring the work of the Executive Boards of Cielo’s Investees and monitoring the economic, financial, marketing, regulatory, administrative, operational and risk management with the support of the Company’s technical areas; (d) supporting and guiding the members of the Governance Bodies of Cielo’s Investees appointed by the Company, providing them with the due subsidies to carry out their duties; and (e) promoting the best alignment of Cielo’s Investees with the Company’s strategic purposes to maximize the business efficiency and effectiveness.
5. Corporate Governance’s Support Tools
5.1. Governance Portal: The Company’s Governance portal is used to duly organize, store and make simultaneously available to the members of the Company’s Governance Bodies, with security and speediness, the information and documents required to attend meetings of the Company’s Governance Bodies.
5.2. Annual Calendar of Corporate Events: At the end of each fiscal year, the Annual Calendar of Corporate Events is submitted to the approval of each Governance Body of the Company. The Corporate Governance Office is responsible for coordinating the definition of the dates of the ordinary meetings of the said bodies with the said members and other Governance Agents involved, ensuring the attendance of all.
5.3. Annual Agenda: Every year, the Corporate Governance Office submits to the approval of the Corporate Governance Bodies a proposal for an Annual Agenda, with the ordinary or extraordinary matters to be discussed by the said bodies, observing their expertise and powers & duties, which are distributed over the months, depending on the time and advance required, considering the frequency of the meetings and the predictability of resolution.
5.4. Follow-up: The Company provides to the Governance Bodies the follow-up document, detailing any requests made by the members during the meetings and appointing those responsible for the subject and deadlines to position the said body on the subject. The Corporate Governance Office is responsible for updating this document, as well as for referring the requests to those responsible.
5.5. Resolution Proposal: All matters that need a resolution and that will be submitted to the Company’s Executive Board and Board of Directors, in addition to the supporting materials to be made available, are followed by Resolution Proposals, which clearly summarize the information on the matter that will be evaluated and resolved on by the said bodies.
5.6. Evaluation of the Governance Bodies, their members, individually, the Chairman of the Board of Directors and the Governance Office: The Company has an annual process to evaluate the work of its Governance Bodies, such as the Boards, their members (individually), the Chairman of the Board of Directors and the Governance Office, following good corporate governance practices and seeking continuous improvement of the Governance Bodies, their members, individually, the Chairman of the Board of Directors, the Governance Office, as well as the Company’s Corporate Governance System .
5.7. Onboarding of Members of the Board of Directors: The Company has an onboarding for new members of the Board of Directors, who are provided with documents and information necessary to perform their duties as Board Members. In addition, in welcome meetings scheduled by the Corporate Governance Office, the new members of the Board of Directors will be introduced to key Company personnel for institutional presentations, with the purpose to provide them with information on the Company, its business and ongoing strategies, its products, as well as relevant questions about its culture, and to present its facilities.
6. Company’s Code of Ethical Conduct
6.1. The Company has a Code of Ethical Conduct that sets the basic principles that should guide the relations and activities in the Company and reinforces the need to comply with the current law, widely disseminated in the Company and publicly disclosed.
7. Institutional Policies
7.1. The other guidelines and rules that help the Company direct its activities and meet its purposes are provided for in its institutional policies, which are publicly disclosed. The Board of Directors is responsible for approving such policies.
IV. Management of Consequences
Employees, suppliers, clients or other stakeholders who see any deviations from the guidelines of this Policy, may report the fact to the Ethics Channel (www.canaldeetica.com.br/cielo or 0800 775 0808), anonymously or not.
- Corporate Governance Office: Complying with the guidelines set forth herein, keeping them updated to ensure that any change to this Policy is incorporated thereto and clarifying doubts relating to its content and application, in addition to the assignments set forth in Item 4.1.3 of this Policy.
- Internal Audit: According to the assignments provided for in Item 3.2.1 of this Policy and the Internal Audit Policy of the Company.
- Management of Affiliates: Focused on managing and monitoring Cielo’s Investees, with its assignments described in Item 4.2.2 of this Policy.
- Members of the Management and Employees: Complying with and enforcing this Policy and, when necessary, engaging the Corporate Governance Office to refer to the Corporate Governance System, the corporate governance practices adopted by the Company, as well as the decision-making process (powers & duties/levels of authority) or any questions regarding the content and application of this Policy.
VI. Additional Documents
- Shareholders’ Agreement of the Company;
- Official Letter 3681, of November 4, 2013, of the Central Bank of Brazil;
- Brazilian Code of Corporate Governance – Publicly Held Companies;
- Code of Best Practices of Corporate Governance;
- Company’s Code of Ethical Conduct;
- Company’s Bylaws;
- Rule 118 – Onboarding for New Members of the Board of Directors;
- Law 6404, of December 15, 1976, as amended (“Brazilian Corporation Law”);
- Company’s Internal Audit Policy;
- Policy on Corporate Risk Management and Internal Controls;
- Company’s Policy on Transactions with Related Parties and other Situations of Conflict of Interest;
- Charter of the Company’s Board of Directors;
- Charters of the Company’s Advisory Committees;
- Charter of the Fiscal Council;
- Charters of the Company’s Advisory Forums.
VII. Concepts and Acronyms
- Governance Agents: “Individuals and bodies involved in the governance system, such as partners, members of the management, members of the fiscal council, auditors, board of directors, fiscal council, etc.”
- Board of Directors: Collegiate body with the purpose of guiding and supervising the management of the Executive Board and deciding on major business issues, including strategic, investment and financing decisions, among other matters set forth in Article 142 of the Brazilian Corporation Law and/or the Company’s Bylaws.
- Fiscal Council: Independent supervisory body of the Management, reporting to shareholders, permanent or not, installed by a decision of the Shareholders’ Meeting, with the purpose to preserve the value of the organization. The duties and powers set forth by law for the Fiscal Council cannot be granted to another body of the Company. The members of the Fiscal Council have the individual power to act, despite the collegiate nature of the body.
- Advisory Committees: Technical advisory bodies to the Board of Directors, which are support instruments that increase the quality and efficiency of the Company’s Board of Directors. The Advisory Committees do not have the power to resolve on matters and their recommendations do not bind the resolutions of the Board of Directors.
- Executive Board: Body responsible for the management of the company’s business, implementation of the strategy and general guidelines approved by the Board of Directors. Through formalized processes and policies, the executive board enables and disseminates the purposes, principles, and values of the organization.
- Advisory Forums: Technical advisory bodies to the Executive Board, which are support instruments that increase the quality and efficiency of the Company’s Executive Board.
- Governance Bodies: Bodies that make up the Company’s Corporate Governance System, such as the Board of Directors, Advisory Committees, Executive Board, Advisory Forums, among others.
- Corporate Governance System: “The system used to direct, monitor and encourage companies and other organizations, involving relationships between partners, the board of directors, executive board, supervisory and control bodies and other stakeholders.”
- Affiliated Companies: Companies in which the Company holds 10% (ten percent) or more of their capital, without, however, having control over them, pursuant to Article 243, Paragraph 1 of the Brazilian Corporation Law.
- Subsidiaries: Companies in which the Company, directly or indirectly, holds rights as partner or shareholder, which permanently guarantee to the Company the preponderance in business resolutions and the power to elect the majority of the members of the Management, pursuant to Article 243, Paragraph 2 of the Brazilian Corporation Law.
- Stakeholders: All relevant stakeholders with interests in the company, or also individuals or entities assuming any type of direct or indirect risk against the Company. Amongst others, we point out: shareholders, investors, employees, society, customers, suppliers, creditors, governments and regulators, competitors, media, associations and professional associations, the user of the electronic means of payment and non-governmental organizations.
VIII. General Provisions
The Company’s Board of Directors is responsible for amending this Policy whenever necessary.
This Policy takes effect on the date of its approval by the Board of Directors and revokes any contrary documents.