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This document, approved by the Board of Directors at its meeting on August 25, 2006, and amended on August 21, 2008, establishes the guidelines and norms for the operation of the following non-statutory committees: Audit and Risk, Strategy and Innovation, and HR and Ethics, hereinafter, collectively referred to as COMMITTEES. The above-mentioned COMMITTEES were created by the Board of Directors in a meeting held on March 23, 2006, for the specific purpose of providing support to the Company's executives, on the matters for which they were created, with the goal of assisting the Company’s Board of Directors with studies and proposals. Besides the above-mentioned COMMITTEES, the Company also has an Executive Committee whose operating rules are established in the Company's own bylaw, since it is statutory.

The COMMITTEES shall be subordinate to the Board of Directors.

1. Objectives and Duties of each Committee


1.1. Objectives and Duties of the Audit and Risk Committee:

Objectives:

Review: (i) the independent audit process, including the appointment, supervision and performance evaluation of the external auditor; (ii) the methodology and effectiveness of the internal audit; (iii) the process by which the company monitors compliance with laws and regulations that affect the presentation of financial statements; (iv) the effectiveness of internal controls and the risk management system; and (v) the treatment and investigation of allegations of fraud.

Duties:

  • Supervise and evaluate the presentation of the financial and accounting statements, as well as the audit of the financial statements, also in regards to the choice or change of accounting practices;
  • Oversee the External Audit, evaluate its recruitment and remuneration, and monitor its work;
  • Examine any disagreement between management and independent auditors;
  • Recommend the approval of audit services, or others, to be executed by the external auditor;
  • Supervise the Internal Audit, analyzing the most appropriate structure for the Internal Audit, which could be done by the company's own employees or third parties hired for this purpose;
  • Establish goals, priorities and monitor the work of the Internal Audit;
  • Oversee the risk management and internal controls process;
  • Assist the Board of Directors in its responsibilities to oversee the acts of the Executive Board related to the preparation and quality of the financial statements;
  • Analyze and suggest procedures to receive, process and handle complaints, whether anonymous or not, related to accounting issues, internal controls and auditing;
  • Assess compliance with laws and regulations;
  • Report noncompliance (fraud) directly to the Board of Directors;
  • Establish appropriate relationships and communication with management;
  • Evaluate proposals whose decisions involve strategic, economic, financial, corporate image and other risks;
  • Monitor risk actions that have been approved by the Board of Directors; and
  • Interact with the Fiscal Council.

1.2. Objectives and Duties of the Strategy and Innovation Committee:

Objectives:

The Strategic Planning process must be grounded in the core competencies of the company, aimed at putting into effect the following topics:

  • Critical review of the business
  • Consistency between objectives and strategies
  • Adherence to market trends
  • Innovation in products and services
  • Competitiveness of products and services
  • Suitability of investments for value creation
  • Sustainable growth

Duties:

  • Propose strategies and innovations for the development, growth and consolidation of the company;
  • Lead and coordinate the development process of the Company's Strategic Planning, with a focus on new market opportunities, which take the company to new heights of growth and profitability, with leadership in preselected market niches;
  • Create within the Company a strategic vision for the future;
  • Monitor the execution and implementation of the Strategic Plan and, by means of relevant changes in scenarios, recommend contingency plans, adjustment of the Strategic Planning to the new scenario and action plans.

1.3. Objectives and Duties of the HR and Ethics Committee:

Objective:

Ensure the alignment of people management processes to the development strategies of the Company.

Duties:

  • monitor the succession process of strategic positions;
  • monitor market practices regarding the remuneration of executives;
  • monitor the remuneration system for administrators;
  • oversee the social responsibility practices adopted by the Company and their impact on its corporate image;
  • monitor the management of the organizational climate and actions of a strategic nature that are taken;
  • evaluate and suggest new management and employee training policies and practices for the Company;
  • oversee and maintain the Company's Code of Conduct, promoting its propagation and disseminating standards of conduct appropriate to the Company;
  • provide guidance, when requested or if there are questions regarding the application of the Code of Conduct, as well as investigate and make decisions when cases of violation of established principles have been verified;
  • represent the Board of Directors in applying and assessing situations that are in conflict with the Code of Conduct, related to positions of administrators and executives, as well as in cases that extend beyond the jurisdiction of the Central Committee.
2. Conditions for fulfilling objectives

In carrying out their obligations, the COMMITTEES must maintain effective working relationships with the Board of Directors, Executive Board, other COMMITTEES and external and internal auditors.

To play their role effectively, each member of the COMMITTEES must develop and maintain their skills and knowledge, including an understanding of the Committee's responsibilities and the company's business, operations and risks.

The Audit and Risk Committee must have a majority of members who possess knowledge in the financial realm, with the ability to read and understand the financial statements; the Strategy and Innovation Committee must have a majority of members with knowledge of the company's strategies and business; and the HR and Ethics Committee must have a majority of members with expertise in people management.

3. Composition

Each COMMITTEE will be composed of at least three and at most six members, to be appointed by the Board of Directors.

The following can participate in the COMMITTEES: members from the Board of Directors, as permanent members; and senior officers, company executives and outside professionals, as invited members, seeking always to avoid situations involving conflicts of interests.

Each Committee will have a Coordinator and a Facilitator. The former will be responsible to preside at the meetings of the Committee to which they belong, and the latter will be responsible for the flow of information, including preparation of meeting agendas and minutes, any contacts with professionals from different departments of the company, external auditors and any guests.

4. Term of Office
The term of office of committee members is two years and will coincide with the term of office of the Company’s Board of Directors.
5. Meetings
The COMMITTEES will meet every two months, according to a timetable which must be approved annually, at the first meeting of each new term. If necessary, additional meetings can be held, likewise in the form of teleconferences, convened by letter, email or phone, with proper due notice, by the Coordinator or any member of the Committee who is appointed by the Coordinator for this purpose.
6. Remuneration
COMMITTEE members, who are also permanent members of the Executive Committee and members of the Board of Directors, will only be remunerated as members of the Executive Committee. COMMITTEE members, who are also permanent members of the Executive Committee, Board of Directors and Executive Board, will be remunerated as members of the Executive Committee and as members of the Executive Board. Other members from the Board of Directors, who participate in COMMITTEES, will be remunerated as members of the Board of Directors with one supplemental payment as COMMITTEE members. However, if the same board member participates in more than one COMMITTEE, they will only receive one supplemental payment. Executive Committee members who participate in other COMMITTEES will not receive the above-mentioned supplemental payment. Senior officers not on the Board of Directors and employees of the Company, who exercise duties in COMMITTEES, will only be remunerated as senior officers and company employees, not receiving any supplemental payment for participating in COMMITTEES. Other COMMITTEE members, who are not administrators or employees of the company, will receive a monthly amount, established by the Board of Directors, for their participation in any of the COMMITTEES. In the case of professionals from outside the company who are invited to participate in the COMMITTEES, they too will be remunerated according to that established by the Board of Directors.
7. Committee Budget

The budget for each of the COMMITTEES will be approved annually by the Board of Directors.

Caxias do Sul, RS - August 21, 2008

Paulo Pedro Bellini

Chairman of the Board of Directors

Carlos Zignani

Secretary of the Board of Directors

Last updated on 2013-06-18T12:18:00