Aiming to create value to its shareholders, Paraná Banco adopted a corporate governance model that meets the requirements of the Level 1 segment of BM&FBOVESPA and the practices recommended by the Brazilian Institute of Corporate Governance (IBGC). Voluntarily Paraná Banco also adopted some requirements of the Level 2 segment of BM&FBOVESPA.
Paraná Banco corporate governance practices
BM&FBOVESPA possess three levels of corporate governance practices (Level I, Level II, and the New Market Level) that differ from each other in the degree of demands. Parana Banco signed a contract adopting to the requirements of Level I, which is a segment destined to negotiations of issued stocks by companies that voluntarily compromise with the adoption of different corporate governance practices and the disclosure of additional information in relation to what already is demanded by the present legislation. One of the Level I demands, for example, is the minimal percentage of 25% of circulation of total stocks. However, as a solution to improve even more the model of corporate governance, Parana Banco adopted practices demanded by Level II voluntarily, such as:
- Tag along rights to the holders of preferred shares, in the same conditions and price offered to the controlling shareholders, in certain circumstances established in Paraná Banco’s by-laws;
- In the event of de-listing from Level 1 or going private, a public offering to purchase all outstanding shares should be done;
- A board of directors comprising a minimum of five directors;
- 20% of the members of the board of directors should be independent; and
- Commitment by the Company, its shareholders, its directors and officers, and the members of its fiscal council to submit to arbitration any and all disputes or controversies which may arise amongst itself relating to, or originating from, the application, validity, effectiveness, interpretation, violations and effects of violation of the provisions of Brazilian corporate law, Paraná Banco’s by-laws, the rules and regulations of the Brazilian National Monetary Council, the Central Bank, and the CVM, as well as other rules and regulations applicable to the Brazilian capital markets, in addition to the listing regulations of the Level 1 segment of BM&FBOVESPA, its listing agreement for adhesion to the Level 1 segment of BM&FBOVESPA, and Arbitration Regulation of the Market Arbitration Chamber.
IBGC Code of Best Practices for Corporate Governance
The Code of Best Practices for Corporate Governance , published by the IBGC, aims at (i) increasing the value of the company; (ii) improving its performance; (iii) facilitating its access to capital at lower costs; and (iv) contributing to its continuity. The Company has adopted the following corporate governance best practices recommended by the IBGC:
- independent auditors to review the Company´s balance sheets and financial statements;
- clearly worded by-laws as to (i) procedure for giving notice of shareholders´ meetings; and (ii) the voting system, election, removal and terms of office of the members of board of directors and board of executive officers;
- transparent disclosure of the annual management reports;
- record of all the dissenting votes in the minutes of the shareholders´ meetings, when required;
- prohibition of use of privileged information and existence of a policy of disclosure of relevant information;
- by-laws´ determination of arbitration as a way to solve any conflict among the shareholders and the Company;
- directors with experience in operational and financial issues and experience as a member in other boards of directors;
- Shareholders´ meetings´ ability to decide, among other things, (i) amendments to the by-laws, (ii) election and removal, at any time, of the members of Banco Pine´s board of directors, board of executive officers and fiscal council, (iii) management bodies accounts and financial statements, (iv) its transformation, merger, consolidation, spin-off, dissolution and liquidation;
- books and records kept accurate and disclose the identity and quantity of shares held by each shareholder;
- non-election of alternate-members to the Company´s board of directors;
- free access of Banco Pine´s information to the members of its board of directors; and
- by-laws´ provision prohibiting the access to information and voting right of the directors whenever there is a conflict of interest.
- compulsory stocks acquisition offer, when resulting in corporate control transfer, to all the stockholders and not only to the controlling block holders. All stockholders shall have the option to sell their stocks under the same conditions. The control transfer shall be accomplished at a transparent price;
- statutory provision for installing a Fiscal Council