ABOUT US

Corporate Governance

In 2000, the São Paulo Stock Exchange (BOVESPA, acronym in Portuguese) introduced three special listing segments, which are known as levels 1 and 2 of Special Corporate Governance Practices and New Market. They intended to create a secondary securities market for Brazilian publicly-held companies that follow the best practices in corporate governance. Listing segments serve to trade shares issued by companies that voluntarily commit to the best practices in corporate governance and more stringent disclosure requirements than those already mandated by the Brazilian laws.

In general, such rules expand shareholders' rights and improve the quality of the information shareholders receive.

We follow the best practices in corporate governance and, thus, strengthen the principles that favor transparency, fairness, and respect for shareholders and create the conditions for developing and maintaining long-term investor relations. Our constant drive to improve our actions in Investor Relations aims to enhance the permanent hotline between all business stakeholders – shareholders, regulatory agencies, brokers, associates, and the community, among others – and us.

We are listed in the New Market (under the ticker symbol PSSA3), a special segment in the São Paulo Stock Exchange that is exclusive to corporations that meet given minimum requirements and stringent corporate-governance rules.

The best practices in corporate governance recommended by the Brazilian Corporate Governance Institute (IBGC, acronym in Portuguese) that we adopt include the following:

  • Our capital is exclusively divided into common shares;
  • All shareholders have the right to sell their stake at the same terms and conditions as would apply to majority shareholders (tag-along rights);
  • A tender offer for all shares outstanding at the current market price, at least, in the event of going private or having our stock delisted from the New Market;
  • The board of directors must have at least five (5) members, with terms of up to two (2) years, and reelections must be allowed;
  • At least twenty percent (20%) of members must be independent directors;
  • Our disclosures are improved and added to our quarterly financial report (QFR) – a document that must be submitted by listed corporations to the Brazilian Securities and Exchange Commission (CVM, acronym in Portuguese) and the São Paulo Stock Exchange –, which is publicly available and contains our quarterly financial information, including our consolidated financial and cash flow statements;
  • Our fiscal-year disclosures are improved and added to our standard financial statements – documents that must be submitted by listed corporations to the Brazilian Securities and Exchange Commission and the São Paulo Stock Exchange –, which are publicly available and contain our annual financial reports, including our cash flow statement;
  • Our financial statements are disclosed according to the international financial reporting standards (IFRS) or the United States generally accepted accounting principles (US GAAP);
  • Our disclosures include the initial statement of beneficial ownership of securities (FR, acronym in Portuguese) – a document that must be periodically submitted by listed corporations to the Brazilian Securities and Exchange Commission and the São Paulo Stock Exchange –, which is publicly available and contains our corporate information, including the amount and characteristics of the securities that we issued and that are currently owned by groups of majority shareholders, directors, officers, and members of the supervisory board, as well as the evolution of such positions;
  • Public meetings are held with analysts and investors at least once a year;
  • An annual calendar containing a schedule of corporate events, such as meetings, disclosures and so forth, is presented;
  • The terms and conditions of agreements between Porto Seguro and associated counterparties are disclosed;
  • The trading of the securities and derivatives our majority shareholders issued is disclosed on a monthly basis;
  • At last twenty-five percent (25%) of our capital remains as shares outstanding;
  • During general public distributions, mechanisms that favor capital dispersion are adopted;
  • We join the market arbitral tribunal to solve corporate disputes.

TRADING AT BOVESPA

Any transactions at the São Paulo Stock Exchange are settled within three (3) business days of the trade date without any inflation adjustments.

Shares are delivered and payments are made by using the Brazilian Clearing and Depository Corporation (CBLC, acronym in Portuguese), the São Paulo Stock Exchange's clearinghouse. Usually, it falls to the seller to deliver the shares to the São Paulo Stock Exchange on the second (2nd) business day after the trade date.

Even though all outstanding shares of a publicly-held corporation can be traded at the São Paulo Stock Exchange, most times less than half of issued shares is actually available for trading by the public. Oftentimes, most shares are owned by a single majority shareholder or a small group of people with a controlling interest, including government bodies. Sometimes, there may not be an active and liquid market for shares, which would limit the investors' ability to resell their shares.

REGULATION OF THE BRAZILIAN CAPITAL MARKET

The Brazilian capital market is regulated by the Brazilian Securities and Exchange Commission (CVM, acronym in Portuguese), which oversees the stock exchanges and capital markets in Brazil, as well as the Brazilian Federal Open Market Committee (CMN, acronym in Portuguese) and the Brazilian Central Bank (BACEN, acronym in Portuguese), which, among other mandates, must license brokers and regulate foreign investments and foreign-exchange transactions. The Brazilian capital market is governed by the Brazilian federal acts 6385/76 and 6404/76 as well as instructions, rulings, and other regulations issued by the Brazilian Securities and Exchange Commission.

According to the Brazilian Federal Act 6404/76, corporations may be publicly held, such as Porto Seguro, or privately held. A company is considered to be publicly-held when its issued shares are traded in a stock exchange or an over-the-counter market. All publicly-held companies are registered with the Brazilian Securities and Exchange Commission and must disclose information, reports, and statements periodically. The securities of a privately-held company may be traded in Brazilian stock exchanges or the Brazilian over-the-counter market. The shares of a publicly-traded company, such as our shares, may also be privately traded, with certain restrictions.

The over-the-counter market is divided into two categories: (i) an organized over-the-counter market where trades are supervised by self-regulated bodies authorized by the Brazilian Securities and Exchange Commission; and (ii) an unorganized over-the-counter market where trades are not supervised by self-regulated bodies authorized by the Brazilian Securities and Exchange Commission. In either case, over-the-counter transactions consist of direct trades between the parties outside the purview of a stock exchange, which are mediated by a financial institution authorized by the Brazilian Securities and Exchange Commission. Other than being registered with the Brazilian Securities and Exchange Commission (and, for organized over-the-counter markets, the appropriate over-the-counter market), no special permits are required for securities from publicly-held companies to be sold in an over-the-counter market. All transactions in the Brazilian over-the-counter market must be disclosed to the Brazilian Securities and Exchange Commission by the respective financial intermediaries.

The São Paulo Stock Exchange may suspend the trading of a given security in anticipation of the announcement of a relevant fact. Trading may also be suspended at the behest of the São Paulo Stock Exchange or the Brazilian Securities and Exchange Commission if, among other reasons, a company is suspected of providing misleading information concerning a relevant event or inaccurately replying to an investigation by the Brazilian Securities and Exchange Commission or the appropriate stock exchange.

The Brazilian Federal Act 6385/76 and the Brazilian Securities and Exchange Commission regulations provide for, among other things, obligations to disclose information, restrictions on trades based on insider trading and market manipulation, as well as protections for minority shareholders.

In the Brazilian stock exchanges, trading by nonresident aliens is subject to certain restrictions according to the Brazilian laws on foreign investments.

SUPERVISORY BOARD

The Brazilian corporate laws require us to have a permanent supervisory board or a supervisory board that only acts during the fiscal years when it is established at the behest of shareholders. Our articles of incorporation provide for the creation of a nonpermanent supervisory board composed of five members and an equal number of substitutes. The supervisory board is a separate body from our board of directors and independent auditors. The main duties of the supervisory board include overseeing the actions of executive management team, give opinions on some of the board of directors' propositions to be submitted to shareholders for deliberation purposes, look at our financial statement, and report any mistakes, instances of fraud, or crimes of which they become aware to the executive boards and shareholders.

The members of the supervisory board, when established, are elected during meetings of stockholders for a term of two (2) years. They can be reelected. According to the Brazilian Federal Act 6404/76, the supervisory board may not include our directors, executives, or employees or a spouse or relative (up to the third degree) of any member of the management team.

Top

Contact IR

Telephone: +55 11 3813-6034

Email: ri@portoseguro.com.br

Copyright © 2011 - Porto Seguro