Nyse Recommendation

Since March 2021, our Company is listed on Novo Mercado, São Paulo Stock Exchange’s highest segment of Corporate Governance. For that reason, our Company must comply with several requirements of corporate governance, defined on the Novo Mercado Regulation, also with the Brazilian corporate law, the CVM Regulation, as well as our own By-laws, internal policies and regulations.

On November 4, 2003, the SEC approved the new corporate governance rules established by the NYSE. Pursuant to these rules, foreign private issuers that are listed on the NYSE, such as we are, must disclose significant differences between corporate governance practices from those observed by US domestic companies under the listing rules of the NYSE.

The significant differences between our corporate governance practices and the NYSE corporate governance standards are as follows:

Independence of Board Members and Independence Tests

Brazilian corporate law requires that our Board members must be elected by our shareholders at the General Shareholders’ Meeting. According to the our Bylaws, the Board of Directors must be composed of a minimum of 7 (seven) and a maximum of 9 (nine) members, elected for a term of 2 (two) years, permitted reelection. Currently, our Board of Directors is composed of 9 (nine) members.

Additionally, according to the Novo Mercado Regulations, companies must have a Board of Directors composed of at least 2 (two) independent members, or 20 % (twenty percent), whichever is greater. The Company is in compliance with the Regulation and, currently, is composed of 3 (three) independent members.

As disclosed in the Novo Mercado Regulation, the General Meeting should decide on the characterization of the nominee to the Board of Directors as an independent member. Each appointed board member must evaluate his/her qualification regarding the independence criteria established by the Novo Mercado Regulation and make a statement attesting his/her independence, when applicable. In addition, the Board of Directors must submit a statement on the declarations of independence in the management proposal for the General Meeting that will elect the board members. Brazilian corporate law and CVM also specify rules regarding certain requirements and restrictions on the qualification, ownership, compensation, obligations and responsibilities of executives and board members of companies.

The independent board members of our Company do not have the practice of meeting ordinarily without the presence of the other board members.

Executive Sessions

According to Brazilian corporate law, the Board of Directors is a collegiate decision-making body whose functions, among others, are to set the general guidelines for the Company’s business and to oversee the Company’s business, including the management of the officers. The Executive Board is the body responsible for representing the Company and performing the acts necessary for its regular operation, being elected by the Board of Directors.

According to legal regulations, up to 1/3 (one third) of the members of the Board of Directors can have positions on the Executive Board, however, this does not prevent the other directors who are not part of this board of directors to supervise the management. In the case of our Company, no member of the Board of Directors is part of the Executive Board.

Fiscal Council

Under Brazilian corporate law, companies may have or not a permanent Fiscal Council. Under our bylaws, our company does not have a permanent Fiscal Council. In accordance with Brazilian corporate law, the Fiscal Council, if installed, operates independently from our management and our external auditors. Its main function is to review the financial statements for each fiscal year and provide a formal report to our shareholders.

According to CVM Instruction 324/2000, the settlement of the Fiscal Council must be composed of at least 3 (three) members and can be requested by shareholders holding at least 2 % of common shares.

Committees

Audit Committee

Under the terms of our bylaws, our Company has a Statutory Audit Committee whose members are appointed by the Board of Directors – being composed of independent members of the Board and external members – and complies with (i) the mandatory requirements of CVM Normative Instruction No. 308/1999; (ii) the mandatory requirements of Novo Mercado Regulation; and (iii) the regulatory requirements of Securities and Exchange Commission (SEC).

The Statutory Audit Committee has the same statutory duties as the Fiscal Council, including those required by the Sarbanes-Oxley Act, in line with the requirements for companies listed on the NYSE.

The creation of this Committee is mandatory under the Novo Mercado Regulation. According to such Regulation, the Audit Committee, whether statutory or not, must be an advisory body of the Company’s Board of Directors, with operational autonomy and its individual budget approved by the Board of Directors. This Committee must be composed of at least 3 (three) members, being at least 1 (one) independent board member and at least 1 (one) with known experience in corporate accounting matters. Currently, the Company has a statutory Audit Committee, composed of 4 (four) members, 2 (two) of whom are independent board members and 2 (two) external members, with 1 (one) of them having experience in corporate accounting matters.

Our Company currently has a Human Resources and Compensation Committee, made up of members of the Board of Directors, including an independent one, whose duties include assessing the candidates to be appointed and elected for the Board of Directors, Advisories Committees and Executive Committees, as well as the review and discussion of management compensation. The creation of this Committee is not required by Brazilian corporate law nor by the Novo Mercado Regulation.

Specifically regarding the compensation of our board members and executive officers, our Company has an Indication and Compensation Policy, duly approved by the Board of Directors, available on the Company’s Investor Relations webpage. Under Brazilian corporate law, the amount of the global compensation of the Board of Directors, Executive Officers and Fiscal Council (if installed) must be approved by our shareholders at the General Meeting.

Corporate Governance and Sustainability Committee

Our Company has a Corporate Governance and Sustainability Committee that has to recommend and monitor the adoption of the best corporate governance and sustainability practices, as well as coordinating the process of implementing and maintaining such practices.

Shareholders’ approval for stock compensation plans

Our Board of Directors is responsible for approving the issuance of new shares, when related to our current stock option plan, provided that the limit of our authorized capital is respected. However, any issuance of new shares that exceeds said authorized capital is subject to shareholders’ approval.

Code of conduct and business ethics

Our Company implemented a Code of Ethics in 2000 to regulate the conduct of our employees with the company, and our customers, suppliers, competitors and other stakeholders.

Although the Code of conduct or ehitcs is not mandatory under Brazilian corporate law, it is required by the Novo Mercado Regulation, and must be approved by the Board of Directors and applicable not only to all employees, but to all executive officers and directors of the Company.

In addition, our Company is in compliance with the corporate governance rules applicable under Brazilian corporate law, and also adopts the highest corporate governance standards established by the Novo Mercado Regulation, aiming to gradually comply with all the new rules established by the NYSE and SEC that are applicable to companies in the United States.