Cielo adopts the best practices of corporate governance recommended by the Brazilian Institute for Corporate Governance (IBGC) and that include accountability, transparency, fairness, and corporate responsibility, as the essential values for the sustainability of its business. On going public, Cielo opted to trade its shares on the BM&FBovespa Novo Mercado, which demands the highest level of corporate governance, as this is the way to consolidate its principles and guarantee the new shareholders more security in terms of their investment.

The model of governance adopted is based on the requirements of the Novo Mercado and Brazil's Securities and Exchange Commission (CVM), and is aligned with the IBGC's rules, in an already well accepted framework that seeks to guarantee the effective adoption and monitoring of the principles of governance in a company's relationships between Shareholders, the Board of Directors, the Executive Board, Independent Auditors, Fiscal Council, Investors in the market and all other stakeholders.


The Company's main shareholders are shown in the following table, which depicts two distinct situations: at the end of 2009 and the end of April 2010, when Banco do Brasil and Banco Bradesco finalized a deal to acquire, through subsidiaries, the remaining stake of shares held by Banco Santander in the Company. At the same time, these two institutions signed a memorandum of understanding to set up a holding company for the joint management of their business in the card payment market, including a study of the possibility of transferring Cielo S.A. stockholdings to the new holding.

Minority stockholders in Cielo have the same rights as the majority shareholders, including the same value for their shares in the case of sale of control (100% tag-along rights).


Breakdown of share capital

Paid-in Capital: 1,364,783,800 ordinary shares
Nominal Capital: 6,000,000,000 ordinary shares
Main shareholders Position as of
12/31/2009		 Position after
04/27/2010		 Δ
Controlling shareholders 57.30% 57.30% 0%
Columbus Holdings S.A. (Bradesco)
 26.56% 28.65% 2.09%
BB Banco de Investimentos S.A. (Banco do Brasil)
 23.54% 28.65% 5.11%
Santusa Holdings S L (Banco Santander Spain)
 7.20% 0% -7.20%
Market – free float 42.40% 42.40% 0%
Treasury 0.30% 0.30% 0%
Total 100.00% 100.00% 0%
       

Note: both the Novo Mercado/BM&FBovespa and IBGC rules concerning corporate governance can be accessed through the sites of these institutions, at the following addresses: www.bmfbovespa.com.br and www.ibgc.org.br.
Note: for more information, please refer to the chapter on the Capital Markets.

Shareholders' Agreement
The shareholders that are part of the controlling group have signed a shareholders' agreement, which establishes the rules related to their relationship in terms of joint interests in and with the Company. This agreement was signed by Columbus Holdings S.A. (Bradesco), BB Banco de Investimentos S.A. (Banco do Brasil), Banco Santander (Brasil) S.A., Santander Investimentos e Participações S.A. (Banco Santander) and Cielo S.A.

The shareholders' agreement stipulates the regulations about the calling and holding of meetings of the Board and shareholders. The previously called meetings that decide on the following subjects will only be included on the agenda in the presence of all the signatory shareholders: (1) acquisition of shares issued by the Company to hold in treasury or cancelled; (2) determining the agendas of shareholders' meetings; (3) proposal to alter the Company's Bylaws; (4) granting stock options for managers and employees; and (5) drawing up the list of three candidate companies to carry out the valuation for cancellation of the Company's registration as a publicly-held corporate entity. The points discussed at any called meeting will be decided upon by a majority vote of the shareholders present, with provisions made concerning the need to formally register the meeting. The decisions will be binding for all the signatory shareholders, including those absent.

Regarding the composition of the Company's Board of Directors, the shareholders' agreement defines:


The shareholders' agreement also determines that: (1) there is a lock-out period of two-years, from the day the initial public offering was announced (June 9, 2009), during which no shareholder can sell any surplus shares on the stock exchange, over-the-counter (OTC) market or in private operations (the agreement states that the shareholders in the controlling block should hold 50.1% of shares for a period of two years after the IPO); (2) any transfer or sale of stock held by the signatories of the agreement, except for the transfer to controllers or under joint control, should be preceded by notification to the other shareholders in the controlling block, who have the preemptive right to purchase the shares on offer, disclosing the potential purchase, price per share and payment conditions. The preemptive purchase right should be exercised within a period of 30 days, and (3) after the two-year lock-up period, and the shareholders can request the Company makes a follow-on offer, with Santander having the right to subscribing to this offer or sale of its shares in an auction on the BM&FBovespa.

If one of the signatory shareholders of the aforementioned agreement, during the validity of the said document, acquire (directly or indirectly) a significant position in terms of the share capital in the Company that provides registration services for corporate entities acquiring payment transactions of the same brand(s) as processed by the Company, and that have a direct influence on the management of the competitor, should take all the necessary measures to abstain from exercising the rights of the agreement or selling any shares issued by the competitor for a period of 90 days.

The shareholders' agreement will initially be valid for 10 years, from the day the initial public offering was announced and can be extended for additional and successive periods of five years, with the possibility of prior withdrawal only with six months of advance warning before the end of any of these terms.

To resolve any controversies arising from the interpretation of the terms in the document, violation of its possessory terms or execution of obligations established in it, the agreement stipulates that the center for any arbitration will be the American Chamber of Commerce.


The Board of Directors is comprised of at least seven and a maximum of 10 members, all shareholders, elected at a General Shareholders' Meeting, with a unified mandate of two years, with reelection permitted. The members of the Board of Directors can be dismissed and substituted at any time if such a decision is taken at a General Shareholders' Meeting. Two members are chosen by the collegiate to serve as the President and Vice-President of the Board. A minimum of 20% of the members of the Board should be independent members.


The duties and powers of the executive directors are defined by the Board of Directors, and among which of particular note are the following:



The Executive Board is comprised of at least two and a maximum of eight members, one being the CEO, on the Director of Investor Relations and with up to six directors without any specific designation, as elected by the Board. The directors can hold several different positions.


The Board of Directors
Name Title Elected on Mandate to
Arnaldo Alves Vieira Chairman 04/30/2010 04/30/2012
Jair Delgado Scalco Member 04/30/2010 04/30/2012
Raul Francisco Moreira Member 04/30/2010 04/30/2012
José Maurício Pereira Coelho Member  04/30/2010 04/30/2012
Denilson Gonçalves Molina Member 04/30/2010 04/30/2012
Paulo Rogério Caffarelli Member 04/30/2010 04/30/2012
Milton Almicar Silva Vargas Member 04/30/2010 04/30/2012
Norberto Pinto Barbedo Member 04/30/2010 04/30/2012
Francisco Augusto da Costa e Silva Indenpendet Member 04/30/2010 04/30/2012
Gilberto Mifano Indenpendet Member 04/30/2010 04/30/2012
       

Note: the curriculums of the Board Members are available on the Company's site, at: www.cielo.com.br/ri


Executive Officers
Director Title Elected on Mandate to
Rômulo de Mello Dias CEO 05/202009 May/12
Marcos Grodetzky CFO and Director of IR 03/20/2010 May/12
Eduardo Campozana Gouveia* Director 05/202009 May/12
Eduardo Chedid Simões Director 05/202009 May/12
Paulo Guzzo Neto Director 05/202009 May/12
Roberto Menezes Dumani Director 12/02/2009 May/12
       

Note: the curriculums of the Executive Officers are available on the Company's site, at: www.cielo.com.br/ri
    * He was substituted by Dilson Ribeiro as from May/2010.


The Company's Fiscal Council sits on a non-permanent basis as and when elected at a general shareholders' meeting at the request of shareholders for the fiscal year in question as determined by law, and its duties and powers are established in Brazilian corporate law.

As and when installed, the Fiscal Council is comprised of at least three and a maximum of five members, with an equal number of alternates, elected at a general shareholders' meeting.
The Fiscal Council works in accordance with the Internal Regulations approved at the general shareholders' meeting at which it was set up.


Fiscal Council
Name Title Elected on Mandate to
Kléber do Espírito Santo Effective Member 04/30/2010 Aug/11
Marcio Hamilton Ferreira Effective Member 04/30/2010 Aug/11
Haroldo Reginaldo Levy Neto Effective Member 04/30/2010 Aug/11
Marcelo Santos Dall’occo  Alternate Member 04/30/2010 Aug/11
André Luis Dantas Furtado Alternate Member 04/30/2010 Aug/11
       

Note: The position of the third alternate is currently temporarily vacant.


The internal committees are set up with technical and consulting responsibilities to advise management on specific subjects, thus making the Company more efficient, and maximizing the return to shareholders while respecting the best practices of corporate governance.

The creation of the committees, the establishment of their responsibilities and the appointment of their members is all carried out by decision of our Board of Directors. Our bylaws establish a full-time audit committee. Our Board of Directors set up the following committees:




The statutory directors and members of the Board of Directors receive a global remuneration determined for each financial period, of an amount approved at the Annual General Shareholders' Meeting (AGM).

At the AGM held on April 13, 2009, this value was R$14.5 million. The total approved was divided into fixed and variable remuneration, profit sharing and the granting of stock options, as described in detail in Explanatory Notes numbers 28 and 29 of the Financial Statements.

At the AGM held on April 30, 2010, the value of compensation approved was up to R$19.0 million.


Cielo's Code of Conduct was revised in 2009 and is now known as its Code of Ethics. All employees were called to take part in the meetings to work on the new text, the aim of which is to reflect the Company's main values.

It is a benchmark document, not just for Cielo and its employees, but also other public groups with which the Company interacts with. It is these different public groups involved in the business that, by making their day-to-day decisions and acting accordingly, ratify the code of conduct expected by Cielo, capable of maintaining relationships that are stable, sustainable and compatible with the interests and most pertinent aspirations of those involved and society as a whole.

The Code of Ethics defines the basic principles that should guide the conduct of all the parties it involves, as well as the actual management of the code, in three main areas of interest:

Mission and Corporate Values – are responsible for defining the Company's identity, and the way it acts. By expressing these actions in day-to-day initiatives and relationships, the employees are contributing to adding value to these relationships.

Primordial aspects of conduct – these aspects are fundamental to the business and should be observed by all Cielo's employees.

Aspects relevant to the behavior with public groups – we consider the Company's basic characteristics in its relationships with each public group with which it interacts, and the following groups in particular:



The Ethics Committee is made up of members of the Executive Board of Directors and three senior professionals. Its role is to receive and analyze allegations of infractions of the Code of Ethics and apply the appropriate penalties.


For these allegations to reach the Committee, an Ethics Channel was created run by an external company, and which can be accessed by Internet 24 hours a day, seven days a week, or by telephone from Monday to Friday between 09 a.m. and 08:00 p.m. The person making the allegation can choose to remain anonymous.


Cielo is committed to arbitration through the Market Arbitration Chamber, as defined in its company Bylaws.

While the Company is a member of the Novo Mercado, it cannot issue preference shares or other participation certificatesand, to cancel its registration with the Novo Mercado, it should make a public offer.

Note: the Code of Ethics is available on the Company's Investor Relations Site, at: www.cielo.com.br/ri.