Articles of Incorporation

Article 1. Argo Energia Empreendimentos e Participações S.A. (“Company”) is a corporation registered as an issuer of securities in regulated markets, which shall be governed by these Articles of Incorporation and by the applicable legal provisions, in particular the Law No. 6.404, dated December 15, 1976, as amended (“Brazilian Corporation Law”).

Article 2. The Company’s purpose is to hold interests in other companies, as partner or shareholder, with the objective of investment in electricity transmission assets in the country.

Article 3. The principal place of business of the Company, and its jurisdiction, is in the City of São Paulo, State of São Paulo, at Rua Tabapuã, no. 841, 5th floor, complex 51, Itaim Bibi, CEP (Postal Code) 04533-013, and it may open and close subsidiaries, branches, agencies, warehouses and representative offices at any locations in the country or abroad, by resolution of the Executive Board.

Article 4. The Company shall operate for an indefinite term.

Article 5. The capital of the Company, fully subscribed and fully paid-in, in Brazilian currency, is of two billion, six hundred and eighty-five million, six hundred and ninety-one thousand, ninety-five Brazilian Reais and one cent (BRL 2,685,691,095.01), represented by one billion, seven hundred and fifty-nine million, four hundred and nineteen thousand, three hundred and eighty-six (1,759,419,386) common shares.

Paragraph 1: The common shares issued by the Company are indivisible with respect to the Company and the holders are given one (1) voting right in the Shareholders’ Meeting’s resolutions.

Paragraph 2: The Company may not issue profit-sharing bonds.

Article 6. The Annual Shareholders’ Meeting of the Company shall be held within the four (4) months after the end of the fiscal year for the purposes established by law, and a Special Shareholders’ Meeting shall be held whenever the corporate interests so require or when the provisions of these Articles of Incorporation, of the Shareholders’ Agreements, or the applicable legislation require resolution of the shareholders.

Paragraph 1: Save exceptions provided for in the Brazilian Corporation Law and in compliance with the formalities provided for in the Shareholders’ Agreements filed at the principal place of business of the Company, the Shareholders’ Meeting shall be called by the Board of Directors fifteen (15) days in advance on first call, and at least eight (8) days in advance on second call. Regardless of any formality provided for in these Articles of Incorporation, in the Shareholders’ Agreements, and in the Brazilian Corporation Law, any Shareholders' Meeting attended by all shareholders shall be considered duly opened.

Paragraph 2: The Shareholders’ Meetings shall be held at the Company’s corporate headquarters, and its shareholders may participate through remote access, such as video conference or conference call, Internet, or other communication tools, provided that they allow the shareholders an effective discussion in real time.

Paragraph 3: The Shareholders’ Meetings shall be opened on first call with the attendance of shareholders representing the majority of the Company’s voting stock, and on second call with any number of shareholders, except if a higher quorum is established by an applicable legislation or in a Shareholders’ Agreement filed at the principal place of business of the Company.

Paragraph 4: The Shareholders’ Meeting shall be opened and chaired by any Officer or member of the Board of Directors of the Company in attendance at the referred meeting, except if the Chairperson of the Board of Directors is in attendance, in which case he/she shall be appointed as the chairperson of the Shareholders’ Meeting. The chairperson of the Shareholders’ Meeting will select one person in attendance to act as secretary.

Paragraph 5: The resolutions of the Shareholders’ Meeting shall be made by half of the votes by the shareholders with voting rights in attendance at the Shareholders’ Meeting plus one (1) vote, not counting the blank votes, except if a higher quorum is established in these Articles of Incorporation, in the applicable legislation and/or in Shareholders’ Agreements filed at the principal place of business of the Company.

Paragraph 6: The shareholders may be represented at the Shareholders’ Meeting by agents appointed pursuant to the paragraph 1 of Article 126 of the Brazilian Corporation Law.

Paragraph 7: Minutes shall be written up for all Shareholders’ Meetings, which shall be recorded in a minutes book, in which the discussions and resolutions made by the shareholders shall be reflected with precision and accuracy. Minutes shall be accepted in a summary format, and a true copy of each minute shall be certified by the chairperson and the secretary of the board and submitted to the competent Board of Trade for filing and annotation, within a maximum of thirty (30) days after the date the respective meeting was held.

Article 7. In addition to the matters provided for by law, within its legal and statutory responsibilities, with observance of the approval quorum established by the Shareholders’ Agreements filed at the principal place of business of the Company, the Shareholders’ Meeting is exclusively responsible to resolve on:

1. Financial loans by the shareholders to the Company or its subsidiaries;
2. Amendment to the Company’s or its subsidiaries’ Articles of Incorporation;
3. Approval of amendments to the Company’s or its subsidiaries’ accounting principles;
4. Dissolution, liquidation, bankruptcy or any other voluntary proceeding of court-supervised reorganization or out-of-court reorganization of the Company or its subsidiaries, as well as the appointment of liquidators or managers;
5. Approval of the overall remuneration of the members of the Board of Directors;
6. The registration or cancellation of registration as a publicly-held company of the Company or its subsidiaries;
7. Increase or reduction of the Company’s or its subsidiaries’ capital through an increase of par value of shares, issue of shares of any class (and calculation of the issue price), issue of convertible securities by the Company, options to purchase shares issued by the Company, and subscription rights of the Company’s shares retained by the shareholders, as well as securities, agreements or instruments held by the shareholders which confirm subscription rights of shares or of rights which may be convertible into shares issued by the Company, including subscription warrants, warrants, options to purchase and other similar instruments;
8. Conversion of the Company or its subsidiaries, or operations of merger, consolidation and spin-off, including shares merger, as well as the participation of the Company or its subsidiaries in any other form of corporate restructuring and/or reorganization of assets, businesses or activities;
9. Association of the Company or its subsidiaries in any way with other companies, including the setting up of joint ventures or consortia, as well as the establishment of wholly or partially owned subsidiaries, or the acquisition of control or equity interest in other companies, consortia, associations or any undertaking;
10. Appointment, replacement or removal, at any time, of members of the Board of Directors of the Company or its subsidiaries, and the change in the number of members of these Boards, as well as the establishment of the overall remuneration of the Executive Board of the Company or its subsidiaries;
11. Amendment to the dividend policy of the Company or its subsidiaries, as well as the payment of dividends or interest on net equity to the shareholders;
12. Allocation of earned surplus of the Company or its subsidiaries;
13. Approval of appraisal reports with respect to assets given by the shareholders in cases of increase of capital;
14. Redemption, amortization or repurchase of shares; and
15. Approval of any matter submitted by the Board of Directors for analysis and approval by the shareholders.

Paragraph 1: The consequences regarding the abstention from voting by the common shareholders and cases of suspension of voting right of common shareholders are governed by the Shareholders’ Agreement filed at the principal place of business of the Company.

Section I – General Provisions

Article 8. The Company is managed by a Board of Directors and by an Executive Board, and they have their respective responsibilities conferred by law and by these Articles of Incorporation.

Paragraph 1: The investiture of managers of the Company in their positions shall be made by term drawn up in a separate book, signed by the appointed manager, and the managers shall be subject to the requirements, impediments, duties, obligations and liabilities provided for in Articles 145 to 158 of the Brazilian Corporation Law, exempt from any share qualification.

Paragraph 2: The managers shall remain in their positions until the appointment of their successors, except if resolved otherwise (i) by the Shareholders’ Meeting, with respect to the members of the Board of Directors; or (ii) by the Board of Directors, with respect to the Officers.

Paragraph 3: The Shareholders’ Meeting shall set a limit for the annual overall remuneration for the distribution between the managers and the Board of Directors shall resolve on the individual remuneration of the managers, subject to the provisions of these Articles of Incorporation.

Section II – Board of Directors

Article 9. The Board of Directors shall be composed of up to six (6) members, elected by the Shareholders’ Meeting, with a unified term of two (2) years, reelection being allowed.

Paragraph 1: The Shareholders’ Meeting which elects the Board of Directors shall appoint the Chairperson of the Board of Directors among the elected members. The respective deputies shall be appointed with the elected members.

Paragraph 2: In the event of absence or temporary incapacity of any member of the Board of Directors of the Company, the member shall be replaced by his/her respective deputy. In the event of vacancy due to the resignation, death or permanent incapacity of any member, or his/her refusal to fulfill his/her respective obligations, a Shareholders' Meeting shall be called for the election and filling of vacant positions, and the deputy director shall complete the term of the replaced director.

Article 10. The Board of Directors shall meet in an annual meeting once at every quarter and in special meeting whenever called by the Chairperson of the Board of Directors. In the event of request for a special meeting by at least three (3) members of the Board, the Chairperson of the Board must call it.

Paragraph 1: The Chairperson of the Board may chair or appoint another member of the Board or Officer who is in attendance to chair the meetings of the Board of Directors. The majority of the members of the Board of Directors in attendance shall decide, in any case, the person who shall act as the Secretary at the meeting, and the referred Secretary may or may not be a member of the Board of Directors.

Paragraph 2: The call for special meetings, or the change of dates set for the annual meetings shall be sent at least ten (10) days in advance, through personal notice sent by email and with effective proof of delivery, for each one of the members of the Board of Directors, and it shall expressly indicate the date, time, and place of the meeting, the agenda, the details for possible remote access of the directors, as well as provide copy of all the available documents and proposals listed in the agenda. The call shall be exempted for meetings of the Board of Directors in which all the members are in attendance.

Paragraph 3: The meetings of the Board of Directors shall be held, preferably, at the corporate headquarters of the Company, and it may take place at another location only with the agreement of the absolute majority of the members.

Paragraph 4: The meetings of the Board of Directors shall be only considered duly opened on first call if the absolute majority of the members of the Board of Directors is in attendance, according to the criteria of the Shareholders’ Agreement filed at the principal place of business of the Company. In the absence of the minimum quorum for the opening of the meeting on first call, another meeting shall be duly called, and it may be opened if at least three (3) directors are in attendance, with observance of the quorums necessary to pass resolutions provided for in the Shareholders’ Agreement filed at the principal place of business of the Company, otherwise, it will be considered not opened.

Paragraph 5: The members of the Board of Directors who participate in meetings through conference call, video conference, or another telecommunication system which allows the identification of the member and real time communication between all the members, shall be considered in attendance at the meeting. The meeting of the Board of Directors of which all the directors have participated through conference call or another communication system shall also be considered as regular, provided that the respective vote is sent to the Company according to the Paragraph 6 below. The minutes with the resolutions made shall be signed afterwards, within ten (10) business days, by all the directors who were in attendance at the meeting, in person or remotely.

Paragraph 6: The members of the Board of Directors may vote via email, fax, letter, or telegram, sent to the Company, for the attention of the Chairperson of the Board of Directors, and in this case, the Secretary of the meeting of the Board of Directors shall write up the respective minute, to which the vote shall be attached.

Paragraph 7: The members of the Board of Directors who are unable to attend a meeting may (i) deliver his/her vote in writing to the Chairperson of the Board of Directors, in person or by mail, sent through certified or registered mail, or sent by email, telefax or facsimile with proof of receipt; or (ii) may be represented by another Director appointed by the same shareholder. In these events, the Directors who were unable to attend the meeting of the Board of Directors shall be considered in attendance at such meeting, including for purposes of call of this meeting.

Paragraph 8: Except as otherwise indicated in these Articles of Incorporation, and subject to the qualified quorums provided for in the Shareholders’ Agreement filed at the principal place of business of the Company, the resolutions of the Board of Directors shall be made by votes of the majority of the members in attendance, each Director being entitled to one vote. The Chairperson of the Board of Directors shall not be entitled to a casting vote under any circumstance.

Paragraph 9: The minutes of the meeting of the Board of Directors shall be written up in the minutes book, and the use of mechanical or electronic systems is allowed, subject to the regulation of the Brazilian Securities and Exchange Commission (“CVM”). Those containing resolutions intended to produce effects before third parties must be filed with the competent Board of Trade.

Article 11. The Board of Directors is exclusively responsible for the resolutions regarding the matters listed below, within its legal and statutory responsibilities, subject to the approval quorums established by the Shareholders’ Agreements filed at the principal place of business of the Company, and each Director is entitled to one vote:

1. to approve the Company's Business Plan and Annual Operating Budget;
2. to approve the criterion and conditions for subscription of shares and payment regarding any increase of capital of the Company or its subsidiaries within the limits of the authorized capital that may be approved in advance by the Shareholders’ Meeting;
3. to approve any investment to be made by the Company or its subsidiaries, in an amount greater than five hundred thousand US dollars (USD 500,000.00), or its equivalent in Brazilian currency;
4. to approve the execution, amendment or termination of financial contracts or agreements by the Company or its subsidiaries with an amount greater than five hundred thousand US dollars (USD 500,000.00), or its equivalent in Brazilian currency, in a single transaction or in a series of related transactions for a period of twelve (12) months;
5. to approve the execution, amendment or termination of contracts, agreements or businesses, or also the issue of any security or instrument which result in contraction of obligation with an amount greater than five hundred thousand US dollars (USD 500,000.00), or its equivalent in Brazilian currency, in a single transaction or in a series of related transactions for a period of twelve (12) months;
6. to approve the acquisition, liquidation, release, sale, lease, encumbrance, grant of security interests or fiduciary guarantees, assignment, donation, transfer or disposition, of any other form, in any fiscal year, of any assets, rights, properties or investments held by the Company or its subsidiaries which exceed the amount of five hundred thousand US dollars (USD 500,000.00), or its equivalent in Brazilian currency, in a single transaction or in a series of related transactions for a period of twelve (12) months;
7. to approve the Company’s interest and investees, individually or through consortia, in auctions or other modalities of contracts related to electricity transmission and fundamental terms and conditions of the Company’s offer (and any relevant changes which may be done to this offering);
8. the initiation, defense or transactions made to prevent or put an end to litigation, arbitration proceedings or other proceedings which value exceed five hundred thousand US dollars (USD 500,000.00), or its equivalent in Brazilian currency;
9. to confer or transfer additional powers to Officers of the Company or its subsidiaries;
10. to elect, remove and replace any of the members of the Company’s Executive Board, or its subsidiaries, subject to other provisions of these Articles of Incorporation and the Shareholders’ Agreement filed at the principal place of business of the Company;
11. to distribute the overall remuneration approved by the Shareholders’ Meeting for the Company’s management among the members of the Board of Directors and the Executive Board;
12. to decide on the periods of temporary and/or scheduled absences of the Officers and the appointment of personnel which shall temporarily replace them in the performance of their duties;
13. to approve the entry of the Company and its subsidiaries in a new line of business;
14. the acquisition, liquidation, sale, loan, encumbrance, to give in guarantee, assignment, donation, transfer or any other form of disposition, of an asset, right or equity interest held by the Company or its subsidiaries which exceed the amount of five hundred thousand US dollars (USD 500,000.00), or its equivalent in Brazilian currency, in a single transaction or in a series of related transactions for a period of twelve (12) months;
15. to approve the execution, amendment, termination or renewal of concession agreements by the Company or its subsidiaries;
16. to approve the assumption of obligations or the concession by the Company or by any subsidiary of the Company of any type of guarantee to the obligations of third parties or shareholders, or entities or people direct or indirectly linked to shareholders, whatever the amount involved may be;
17. to approve the execution, amendment or termination of any contract or agreement with the related parties, by the Company or its subsidiaries;
18. to determine the Company’s vote at any meetings of any company in which the Company holds direct interest, or the vote to be cast at meetings of the Board of Directors of its subsidiaries, in the event that the matters are similar to the matters provided for in this Article 11; and
19. to choose, appoint and remove the Company’s independent auditors;

Article 12. The Board of Directors shall rely on the support from the following technical committees for a better performance in their duties: (a) Advisory Committee, (b) Finance and Investment Committee and (c) Audit and Compliance Committee, which may give suggestions to the Board of Directors of the Company, but having no binding force.

Paragraph 1: The support committees of the Board of Directors shall be integrated by personnel designated by the Board of Directors itself, which shall determine the applicable rules to the committees, including standards for their purposes, field of business, structure, term of members, remuneration and operation, which will be determined on proper internal regulations, subject to the criteria and scopes of work detailed in the Shareholders’ Agreement filed at the principal place of business of the Company.

Section III – Executive Board

Article 13. The Company is managed by an Executive Board composed of at least three (3) members, elected by the Board of Directors, which may be removed by them at any time, with one (1) Chief Executive Officer (CEO), one (1) Chief Financial Officer and Investor Relations Officer (CFO) and one (1) Chief Operating Officer (COO). Moreover, others may be elected for the positions of Institutional Official, Engineer and Implementation Officer, among others with no specific designation. The members may hold more than one position.

Paragraph 1: The Officers shall have a unified term of two (2) years, reelection being allowed. The Officers must remain in their respective positions until the appointment and investiture of their respective deputies.

Paragraph 2: In the event of absence or temporary incapacity of any Officer, he/she shall be temporarily replaced by a deputy designated by the Board of Directors, always considering the Chief Executive Officer’s decision. In the event of vacancy due to the resignation, death or permanent incapacity of any member, or his/her refusal to fulfill his/her respective obligations, the Board of Directors shall be called for the election and filling of vacant positions, and the deputy Officer shall complete the term of the replaced Officer.

Paragraph 3: The Officers shall provide the Board of Directors with any and all information requested in relation to the Company and its controlled and affiliated companies, and if requested, they shall attend the Board of Directors' meetings and support committees to provide clarifications.

Article 14. The Executive Board shall meet whenever the corporate interests so require, through call by any of the Officers.

Paragraph 1: The meetings of the Executive Board shall be opened with the attendance of the absolute majority of the members. One of them shall act as the Chairperson of the meeting and he/she shall choose a Secretary, and the referred Secretary may or may not be a member of the Executive Board.

Paragraph 2: The members of the Executive Board who participate in meetings through conference call, or another telecommunication system shall be considered in attendance at the meeting. The meeting of which all the Officers have participated through conference call or another communication system shall also be considered as regular, provided that the resolutions made are object of the minute signed by all in attendance afterwards, or that the respective vote is sent to the Company according to the Paragraph 3 below.

Paragraph 3: The members of the Executive Board may vote via email, fax, letter, or telegram, sent to the Company, for the attention of the Chief Executive Officer, and in this case, the Secretary of the meeting shall write up the respective minute, to which the vote shall be attached.

Paragraph 4: At the meetings, the Executive Board shall decide by majority of votes from those in attendance, and each Officer is entitled to one vote and the Chief Executive Officer is entitled to a possible casting vote.

Paragraph 5: The minutes of the meetings of the Executive Board shall be written up in a minutes book, and the use of a mechanical system is allowed.

Paragraph 6: The following matters are subject to the approval by the Executive Board of the Company. Notwithstanding, the matters resolved by the Executive Board of the Company under this paragraph shall be reported to the Advisory Committee afterwards:

1. Approval regarding the contracting of obligations of any kind, as well as the execution of any contract by the Company, with an amount lower than five hundred thousand US dollars (USD 500,000.00), or its equivalent in Brazilian currency, in a single transaction or in a series of related transactions for a period of twelve (12) months, as well as the submission of an offer to the Board of Directors when the contracting exceeds the referred time and amount parameters;
2. Submission of an offer to the Board of Directors regarding the conduction of any investment in research or development of new products and other intangible assets;
3. Approval regarding the sale, acquisition, transfer, encumbrance, or another form of disposition of fixed assets, including the constitution of any encumbrance of such fixed assets, by the Company, with an amount lower than five hundred thousand US dollars (USD 500,000.00), or its equivalent in Brazilian currency, in a single transaction or in a series of related transactions for a period of twelve (12) months, as well as the submission of an offer to the Board of Directors when the sale, acquisition, transfer, encumbrance, or another form of disposition of fixed assets exceed the referred term and amount parameters; and
4. Approval of any legal or administrative measure, including the execution of agreements or waiver of rights, with amounts lower than five hundred thousand US dollars (USD 500,000.00), or its equivalent in Brazilian currency, as well as the submission of an offer to the Board of Directors when the amount involved in the legal or administrative measure and/or in the agreement or waiver of rights exceeds the referred term and amount parameters.

Article 15. The Executive Board is the executive and representative body of the Company, being responsible for ensuring its regular operation, having the power to perform any and all acts related to corporate purposes, except those that, by operation of law or of these Articles of Incorporation, depend on the prior approval of the Shareholders' Meeting or the Board of Directors.

Article 16. The Chief Executive Officer shall: (i) perform the general supervision of the competencies and duties of the other members of the Executive Board; (ii) promote studies and determine the commercial policy of the Company; (iii) submit the Company’s monthly reports to the Board of Directors; (iv) propose development plans in all business segments of the Company to the Board of Directors; (v) prepare and suggest projects of organizational change to the Board of Directors whenever necessary for the business; and (vi) coordinate matters related to human resources.

Article 17. The Chief Financial Officer and Investor Relations Officer shall: (i) coordinate and supervise the administrative, accounting and economic and financial activities of the Company; (ii) participate in the preparation and follow the implementation of strategic and business plans; (iii) represent the Company before the Brazilian Securities and Exchange Commission (CVM), shareholders, investors, stock exchange, Central Bank of Brazil and other bodies related to the activities developed in capital markets; (iv) plan, coordinate and guide the relation and communication between the Company and its investors, the CVM, and the entities whose Company’s securities are admitted to trading; (v) propose directives and standards for the relations with the Company’s investors; (vi) comply with the requirements established by the law and regulation of the capital market and release the relevant information regarding the Company and its businesses to the market, pursuant to the Law and the applicable regulation; and (vii) ensure the compliance with the corporate governance rules and the statutory and legal provisions related to the capital market.

Article 18. The Institutional Official shall: (i) coordinate the representation and defense of the Company’s purposes and its controlled companies on matters which fall within their regulatory issues with the Brazilian Electricity Regulatory Agency - ANEEL, Ministry of Mines and Energy - MME, Energy Research Company - EPE, the ONS – Brazilian National Power Grid Operator, forums, seminars and associations of the sector; (ii) coordinate the inspection procedures resulting from ANEEL and MME regarding the Company and its controlled companies; (Iii) coordinate the release of the Company’s and its wholly owned subsidiaries’ institutional and corporate information, based on the Business Plan and/or Annual Operating Budget; (iv) coordinate the supervision of the legislative and regulatory propositions, as well as statements of the Company and its controlled companies; (v) coordinate the environment area of the Company and its controlled companies, including plans, reports, and environmental projects and social responsibility in every phase of the environmental licensing process; and (vi) coordinate the land issues of the Company and its controlled companies, including the processes of registration, assessment, negotiation, release and regularization and maintenance of lands associated to their projects.

Article 19. The Chief Operating Officer shall: (i) coordinate the activities of the Company and its subsidiaries related to projects, buildings, infrastructure commissioning, operation and maintenance necessary for their activities; (ii) coordinate the activities related to the planning and management of contracts related to the implementation, commissioning, operation and maintenance of projects and assets of the Company and its subsidiaries, in order to comply with the terms and budgets of infrastructure projects; (iii) coordinate the activities for the implementation of the investment plans of the Company and its subsidiaries, mainly including pre-operating and operating activities; (iv) select, manage, supervise and integrate the third parties and suppliers hired for the implementation of projects; (v) control and coordinate the technical activities for the planning, follow-up and fulfillment of the investments in fixed asset (CAPEX) destined to infrastructure projects of the Company and its subsidiaries; and (vi) coordinate the operating and maintenance activities, quality and occupational safety.

Article 20. The other Officers with no Specific Designation shall, in addition to the duties, responsibilities and powers vested on them by the Board of Directors, and subject to the policy and guidance set out previously by the Board of Directors: (i) assist the Chief Executive Officer in his/her duties; (ii) plan, coordinate, organize, supervise and direct the activities related to the business unit of the Company, attributed to it by the Chief Executive Officer, ensuring its performance and result in accordance with the operating policies determined by the Company; and (iii) perform other duties or responsibilities given to them, from time to time, established by the Chief Executive Officer and by the Board of Directors.

Article 21. The Company shall be represented as follows:

1. by two (2) Officers, jointly;
2. by one (1) Officer (necessarily the Chief Executive Officer or the Chief Financial Officer) jointly with one (1) attorney-in-fact, duly invested with special powers, under the Paragraph 1 below:
3. by one (1) attorney-in-fact who is an employee of the Company, jointly with another attorney-in-fact with special powers, under the Paragraph 1 below, duly appointed, jointly, for the practice of any acts in the amount of up to one hundred thousand Brazilian Reais (BRL 100,000.00) in a single operation;
4. by one (1) Officer or one (1) attorney-in-fact with special powers, under the Paragraph 1 below, duly appointed for the practice of the following acts:

(a) in acts of representation of the Company before any federal, state and local public bodies, class entities, in Shareholders’ or Members’ Meetings of the Companies in which the Company shares interest, and in Shareholders’ Meetings or Meetings of Entities of Private Law in which the Company participates as sponsor, founding member or, simply, participant member;

(b) indorse checks for deposit in bank accounts of the Company, regardless of the amount;

(c) representation of the Company before unions or the Labor Court; for matters of admission, suspension or dismissal of employees; and for labor agreements; and

(d) for the practice of any acts which do not entail pecuniary obligation for the Company.

Paragraph 1: The powers of attorney shall always be granted on behalf of the Company by two (2) Officers, jointly, and the power of attorney must specify the powers vested thereby and the validity term, which must be limited to a maximum of one (1) year, with the exception of: (a) the powers of attorney with an ad judicia clause, which may be granted for a term longer than one (1) year, (b) the powers of attorney for purposes of receiving service of process and notices abroad (process agent), which may be granted for a term longer than one (1) year, and (c) the powers of attorney granted to financial institutions in the scope of debt operations, which may be established for the term of the respective financial agreement.

Section IV – Fiscal Council

Article 22. The Fiscal Council of the Company, which shall operate on temporary basis, shall solely be installed whenever requested by the shareholders pursuant to the Law, and shall be composed of at least three (3) permanent members, either shareholders or not, elected by the Shareholders' Meeting in which its operation is requested.

Sole Paragraph - The remuneration of the members of the Audit Committee shall be established by the Shareholders' Meeting at which they are elected.

Article 25. The fiscal year shall begin on January 1st and end December 31st of each year. At the end of each fiscal year, the Executive Board shall prepare the Balance Sheet and other Financial Statements required by law, which shall be audited by an independent auditor registered with the CVM.

Article 26. Retained losses and provision for income tax and social contribution on net earnings shall be deducted from the earnings or losses for the fiscal year. The net earnings determined after the deductions established in this Article 24 will be used successively, in the following order:

1. Five percent (5%) shall be deducted for the allocation to the legal reserve up to the maximum limit of twenty percent (20%) of the capital, and it may be waived in fiscal years in which the balance of this reserve, plus the capital reserves, exceeds thirty percent (30%) of capital;
2. payment of Dividends;
3. after the deduction provided for in “i” e “ii”, the common shareholders shall have the right to receive a mandatory dividend corresponding to one percent (1%) of the net earnings of the fiscal year; and
4. the remaining balance, after the deductions of items “i”, “ii” and “iii” above, and after the compliance with the legal provisions, shall have the allocation established by the Shareholders’ Meeting, subject to the applicable legislation and the provisions of the Shareholders’ Agreement.

Article 25. In compliance with the relevant legal and regulatory provisions, the Company must prepare semi-annual balance sheets, and it may declare dividends to the earnings account calculated in these balance sheets, and also, by resolution of the Shareholders’ Meeting, it may (i) prepare quarterly or monthly balance sheets and declare dividends to the earnings account calculated in these balance sheets. and (ii) declare interim dividends to the earned surplus or appropriated retained earnings account existing in the last annual or semi-annual balance sheet.

Article 26. The Board of Directors may pay or credit, in each fiscal year, interest on net equity ad referendum of the Annual Shareholders’ Meeting, which appraises the financial statements related to the respective fiscal year.

Article 27. In compliance with the relevant legal and regulatory provisions, the dividends and interests on net equity paid or credited pursuant to the articles above shall be allotted to the mandatory dividend.

Article 28. The dividends attributed to the shareholders shall be paid within the terms established by law, and monetary readjustment and/or interest shall solely be applicable if provided so by the Shareholders’ Meeting and, if not claimed within three (3) years from the publication of the act that has authorized their distribution, they shall lapse in favor of the Company.

Article 29. The Company shall solely be dissolved and liquidation by resolution of the Shareholders' Meeting or in the other events provided by Law.

Paragraph 1: The Shareholders' Meeting that decides upon liquidation shall appoint the respective liquidator and establish the remuneration thereof.

Paragraph 2: The Shareholders’ Meeting, if requested by shareholders representing the number established in law, shall elect the Audit Committee, for the liquidation period.

Article 30. The Company, its shareholders, managers and Audit Committee members agree to resolve, by means of arbitration, administered by the Arbitration and Mediation Center of the Brazil-Canada Chamber of Commerce, any and all disputes or controversies that may arise between them, related to or arising out of, in particular, the application, validity, effectiveness, interpretation, violation and its effects of the provisions contained in the Brazilian Corporation Law, in these Articles of Incorporation, in the rules issued by the National Monetary Council, the Central Bank of Brazil and the CVM, as well as other rules applicable to the functioning of the capital market in general, in addition to those contained in the Arbitration Regulations of the Chamber.

Article 31. The Company shall provide the agreements executed with its related parties, shareholders' agreements and stock option programs or other securities issued by the Company, whenever requested by a shareholder.

Article 32. The Company must comply with any shareholders' agreements filed at its principal place of business (“Shareholders’ Agreement”), and the Executive Board must refrain from registering share transfers, and the Chairperson of the Shareholders’ Meeting must refrain from calculating votes contrary to their terms, as set forth in Article 118 of the Brazilian Corporation Law.

Article 33. In the event of registration of a publicly-held company in category A, the Company will adhere to the special segment of the securities market or of an entity that maintains the organized over-the-counter market that assures, at least, the differentiated levels of corporate governance practices provided for in CVM Instruction No. 578, dated August 30, 2016, as amended.

Article 34. The omissions in these Articles of Incorporation will be solved by the Shareholders’ Meeting and regulated in accordance with the provisions of the Brazilian Corporation Law.